Calculate this year's ending balance in Finished Goods inventory two ways—using variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 4,750 units in its Finished Goods inventory?
Calculate this year's ending balance in Finished Goods inventory two ways—using variable costing and using absorption costing. 1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 4,750 units in its Finished Goods inventory?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Topic Video
Question
1-a. Calculate this year's ending balance in Finished Goods inventory two ways—using variable costing and using absorption costing.
1-b. Does it appear that the company is using variable costing or absorption costing to assign costs to the 4,750 units in its Finished Goods inventory?
2. Assume that the company wishes to prepare this year's financial statements for its stockholders.
a. Is Finished Goods inventory of $104,500 the correct amount to include on the balance sheet for external reporting purposes?
b. What balance should be reported in the Finished Goods inventory account for external reporting purposes?
Transcribed Image Text:Sierra Company incurs the following costs to produce and sell its only product.
Variable costs per unit:
Direct materials
$
$
$
$
10
Direct labor
8
Variable manufacturing overhead
Variable selling and administrative expenses
Fixed costs per year:
4
Fixed manufacturing overhead
Fixed selling and administrative expenses
$
90,750
$ 285,000
During this year, 30,250 units were produced and 25,500 units were sold. The Finished Goods inventory account at the end of this
year shows a balance of $104,500 for the 4,750 unsold units.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education