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
unit sold 5,000 5,000 5,000 15,000
units produced 5,000 6,000 4,000 15,000
fixed production cost 50,000 50,000 50,000
variable production cost p/u 75 75 75
selling price per unit 225 225 225
fixed selling and admin expenses 5,000 5,000 5,000
1. Calculate profit and the value of ending inventory for each year using full costing
2.Explain why profit fluctuates from year to year even though the number of units sold, the selling price, and the cost of structure remain constant.
3.Calculate profit and the value of ending inventory for each year using variable costing.
4.Explain why, using variable costing, profit does not fluctuate from year to year.