Sparn Limited incurs the following costs to produce and sell a single product: $ Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 2e 10 4 8 180, een 600,000 During the last year, 30,000 units were produced and 22,500 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $85,000 for the 2.500 unsold units Required: 1-a. Is the company using absorption costing or variable costing to cost units in the Finished Goods Inventory account? Absorption costing Variable costing 1-b. Show computations to support your answer. 2 Variable Costing Absorption Costing Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Total cost, 2.500 units $ 0 0 2. Assume that the company wishes to prepare financial statements for the year to issue to its shareholders. a. Is the $85,000 figure for finished goods inventory the correct amount to use on these statements for external reporting purposes? Yes O No b. At what dollar amount should the 2,500 units be carried in Inventory for external reporting purposes? Inventory value for external reporting purposes