Chapter 6 Evercisesx Sierra Conpany Incurs Ti × 166 Valuc 166 PontsCx Clerto.mhe

Question

Chapter 6 Evercisesx Sierra Conpany Incurs Ti × 166 Valuc 166 PontsCx Clerto.mheducation.com/hm.tpx value 10.00 points Sierra Company incurs the following costs to produce and sell a single product Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expenses $ 10 $ 8 $ 4 $ 5 Fixed costs per year deistraide expenses$255 00 Fixed manufacturing overhead Fixed selling and administrative expenses $ 285,000 During the last year, 28,250 units were produced and 26,000 units were sold. The Finished Goods in account at the end of the year shows a balance of $49,500 for the 2,250 unsold units Required 1. Determine whether the company is using absorption costing or variable costing to cost units in the Finished Goods inventory account Calculate the ending balance in the Finished Goods inventory account under variable costing a absorption costing a. Ending Balance in Finished Goods Variable costing Absorption costing b Which costing method is the company using to cost units In the Finished Goods inventory accou 0 Type here to search DX

Explanation / Answer

a Ending Balance in Finished Goods Variable costing 49500 =2250*(10+8+4) Absorption costing 54000 =2250*(10+8+4+56500/28250) b Variable costing 2a No, because variable costing is not generally accepted for external reporting. b Finished goods inventory balance for external reporting purposes $54000

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