Sierra Company incurs the following costs to produce and sell its only product.Direct materials $ $10$Variable manufacturing overhead $ $3$Fixed costs per year:Fixed selling and administrative expenses $ $290,000$During this year, $28,750$ units were produced and $25,250$ units were sold. The Finished Goods inventory account at the end of this Req$1A$

Req$1B$

Req$2A$

Req$2B$

Does it appear that the company is using variable costing or absorption costing to assign costs to the $3,500$ units in its

Finished Goods inventory? Assume that the company wishes to prepare this year's financial statements for its stockholders. Is Finished Goods inventory

of $$80,500$ the correct amount to include on the balance sheet for external reporting purposes? Assume that the company wishes to prepare this year's financial statements for its stockholders. What balance should be

reported in the Finished Goods inventory account for external reporting purposes?

Finished goods inventory balance for external reporting purposes

year shows a balance of $$80,500$ for the $3,500$ unsold units.

Required:

$1-$a$.$ Calculate this year's ending balance in Finished Goods inventory two ways$-$using 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 $3,500$ units in its Finished

Goods inventory?

Assume that the company wishes to prepare this year's financial statements for its stockholders.

a$.$ Is Finished Goods inventory of $$80,500$ 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?

Complete this question by entering your answers in the tabs below.

Req$1A$

Req$1B$

Req $2$ A

Req $2B$

Calculate this year's ending balance in Finished Goods inventory two ways$-$using variable costing and using absorption

costing. $($Round intermediate calculation to the nearest dollar amount.$)$

Ending Balance in

Finished Goods

Variable costing

Absorption costing