Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: Direct materials Direct labor 10 9. Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 24 $ 4 $ 87,750 $ 315,000 During this year, 29,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $84,000 for the 4,000 unsold units. Required: 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 4,000 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 $84,000 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?
Sierra Company incurs the following costs to produce and sell its only product. Variable costs per unit: Direct materials Direct labor 10 9. Variable manufacturing overhead Variable selling and administrative expenses Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 24 $ 4 $ 87,750 $ 315,000 During this year, 29,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this year shows a balance of $84,000 for the 4,000 unsold units. Required: 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 4,000 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 $84,000 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Complete this question by entering your answers in the tabs below.
Req 1A
Req 18
Req 2A
Req 2B
Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption
costing. (Round intermediate calculation to the nearest dollar amount.)
Ending Balance in
Finished Goods
Variable costing
Absorption costing
Reg 1A
Req 1B
>](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8e618922-15b4-4b1a-aa16-e7c177566d62%2Fc1f275dc-6997-4048-b99a-b15e10edbe60%2Fvgaoxfs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1A
Req 18
Req 2A
Req 2B
Calculate this year's ending balance in Finished Goods inventory two ways-using variable costing and using absorption
costing. (Round intermediate calculation to the nearest dollar amount.)
Ending Balance in
Finished Goods
Variable costing
Absorption costing
Reg 1A
Req 1B
>
![Sierra Company incurs the following costs to produce and sell its only product.
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative expenses
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
10
9.
%24
24
$87,750
$ 315,000
During this year, 29,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this
year shows a balance of $84,000 for the 4,000 unsold units.
Required:
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 4,000 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 $84,000 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?
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2A
Req 2B](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8e618922-15b4-4b1a-aa16-e7c177566d62%2Fc1f275dc-6997-4048-b99a-b15e10edbe60%2F5ndstd_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Sierra Company incurs the following costs to produce and sell its only product.
Variable costs per unit:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative expenses
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
10
9.
%24
24
$87,750
$ 315,000
During this year, 29,250 units were produced and 25,250 units were sold. The Finished Goods inventory account at the end of this
year shows a balance of $84,000 for the 4,000 unsold units.
Required:
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 4,000 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 $84,000 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?
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B
Req 2A
Req 2B
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