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Spar Limited incurs the following costs to produce and sell a single product: Variable costs per unit: Direct materials Direct labour Variable sanufacturing overhead Variable selling and administrative expenses Fixed costs per years Fixed manufacturing overhead Pixed selling and administrative expenses 373,100 550,400 During the last year, 53,300 units were produced and 34,400 units were sold. The Finished Goods Inventory account at the end of the year shows a balance of $327,600 for the 6,300 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. Variable Costing Absorption Costing Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Total cost, 6,300 units $ 05 2. Assume that the company wishes to prepare financial statements for the year to issue to its shareholders. a. Is the $327600 figure for finished goods inventory the correct amount to use on these statements for external reporting purposes? Yes No b. At what dolar amount should the 6,300 units be carried in inventory for external reporting purposes? Inventory value for external reporting purposes

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