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:

Required
a. Calculate profit and the value of ending inventory for each year using full costing. Round cost percent to two decimal places.
b. Explain why profit fluctuates from year to year even though the number of units sold, the selling price, and the cost structure remain constant.
c. Calculate profit and the value of ending inventory for each year using variable costing.
d. Explain why, using variable costing, profit does not fluctuate from year to year.

Transcribed Image Text:

2014 5,000 5,000 $50,000 Total 2015 5,000 6,000 2016 5,000 5,000 4,000 15,000 Units sold Units produced Fixed production costs Variable production costs per unit Seling price per unit Fixed selling and administrative $50,000 $50,000 $ 225 $ 225 5,000 5,000 75 75 75 225 expenses S 5,000