Sparn Limited incurs the following costs to produce and sell a single product 10 5 Variable costa per unit Direct materials Direct labour Variable manufacturing over head Variable selling and administrative expenses Fixed costs per yeart Fixed manufacturing overhead Fixed selling and administrative expenses 4 90.000 300,000 During the last year, 30,000 units were produced and 25.000 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $85,000 for the 5,000 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. Variable Costing Absorption Costing Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead