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 expensen Fixed costo per year Fixed manufacturing overhead Fixed selling and administrative expenses 26 7 6 4 268,000 573,800 During the last year, 53,600 units were produced and 30,200 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $304,200 for the 7,800 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 1-6. Show computations to support your answer. Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Total cost 7,800 units Variable Absorption Costing Costing S 26 $ 26 77 6 0 5 $ 39 $ 441 $ 304,200 2. Assume that the company wishes to prepare financial statements for the year to issue to its shareholders. a. Is the $304,200 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 7,800 units be carried in Inventory for external reporting purposes? Inventory value is external reporting purposes