BBS is a calendar- year corporation that manufactures baseballs. BBS produced 9.5 million baseballs in 20X7 and incurred fixed production overhead costs of $ 2 million. In the past 5 years it has produced the following number of baseballs:
20X2 9.7 ……………………… million
20X3 9.7 ……………………… million
20X4 9.1 ……………………… million
20X5 10.1 …………………….. million
20X6 10.1 …………………….. million
The decline in production in 20x4 was due to an employee strike. Read ASC 330- 10- 30 and determine what amount of fixed production overhead costs should be allocated to inventory and what amount should be included in current- period expenses. Outline your thought process as well as the judgment(s) you made in reaching this conclusion.