Problem - Variable and Full Costing: Sales and Production Fluctuate
Hamilton Stage Supplies is a manufacturer of a specialized type of light used in theaters. Information on the first three years of business is as follows:
2014 2015 2016 Total
Units sold 5,000 5,000 5,000 15,000
Units produced 5,000 6,000 4,000 15,000
Fixed production costs $50,000 $50,000 $50,000
Variable production costs per unit $75 $75 $75
Selling price per unit $225 $225 $225
Fixed selling price and $5,000 $5,000 $5,000
Administrative expenses
A. Calculate profit and the value of ending inventory for each year using full costing. Round cost percent to two decimal places.
B. Calculate profit and the value of ending inventory for each year using variable costing.