Sparn Limited incurs the following costs to produce and sell a single product:

$\backslash$table$[[$Variable costs per unit:,$],[$Direct materials,$29],[$Direct labour,$14],[$Variable manufacturing overhead,$3],[$Variable selling and administrative expenses,$5],[$Fixed costs per year:,$404,800],[$Fixed manufacturing overhead,$554,200],[$Fixed selling and administrative expenses,$]]$

During the last year, $50,600$ units were produced and $44,600$ units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $$276,000$ for the $6,000$ unsold units.

Required:

$1-$a$.$ Is the company using absorption costing or variable costing to coit units in the Finished Goods Inventory account?

Absorption costing

Variable costing

$1-$b$.$ Show computations to support your answer.

$\backslash$table$[[$Direct materials,$\backslash$table$[[$Variable$],[$Costing$]],\backslash$table$[[$Absorption$],[$Costing$]]],[$$$,29,$$$,29],[$Direct labour,,$14,,14],[$Variable manufacturing overhead,,$3,,3],[$Fixed manufacturing overhead,,,,$8],[$Unit product cost,$$,46,$$$,54],[$Total cost$,6,000$ units,$$,000,,]]$