Sierra Company incurs the following costs to produce and sell its only product. During this year, 30,750 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $126,500 for the 5,750 unsold units. Required: 1-a. Calculate this year's ending balance in Finished Goods inventory two waysusing variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 5,750 units in its Finished Goods inventory? 2. Assume that the company wishes to prepare this year's financial statements for its stockholders. a. Is Finished Goods inventory of $126,500 the correct amount to include on the balance sheet for external reporting purposes? b. What balance should be reported in the Finished Goods inventory account for external reporting purposes? During this year, 30,750 units were produced and 25,000 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $126,500 for the 5,750 unsold units. Required: 1-a. Calculate this year's ending balance in Finished Goods inventory two waysusing variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 5,750 units in its Finished Goods inventory? 2. Assume that the company wishes to prepare this year's financial statements for its stockholders. a. Is Finished Goods inventory of $126,500 the correct amount to include on the balance sheet for external reporting purposes? b. What balance should be reported in the Finished Goods inventory account for external reporting purposes? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing. (Round intermediate calculation to the nearest dollar amount.) Complete this question by entering your answers in the tabs below. Assume that the company wishes to prepare this year's financial statements for its stock reported in the Finished Goods inventory account for external reporting purposes? Finished goods inventory balance for external reporting purposes
