Sparn Limited incurs the following costs to produce and sell a single product: During the...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Sparn Limited incurs the following costs to produce and sell a single product: During the last year, 30,000 units were produced and 22,500 units were sold. The Finished Goods Inventory account at the end of year shows a balance of $85,000 for the 2,500 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. Absorption costing Variable costing 1-b. Show computations to support your answer. 2. Assume that the company wishes to prepare financial statements for the year to issue to its shareholders. a. Is the $85,000 figure for finished goods inventory the correct amount to use on these statements for extemal reporting purposes? Yes b. At what dollar amount should the 2,500 units be carried in inventory for external reporting purposes
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
