Sampson Steel produces high-quality worktables. The company has been in operation for 3 years, and sales have declined each year due to increased competition. The following information is available:

Required
a. Calculate profit and the value of ending inventory for each year under full costing.
b. Calculate profit and the value of ending inventory for each year under variable costing.
c. Explain how management of Sampson could manipulate earnings in 2018 by producing more units than are actually needed to meet demand. Could this approach to earnings management be repeated year after year?

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2017 2018 Total 2019 Units sold 8,000 10,000 10,000 27,000 9,000 10,000 7,000 27,000 Fixed production costs Variable production costs per unit Selling price per unit Fixed selling and administrative expenses $350,000 $350,000 $350,000 100 350 $300,000 100 $ 350 100 350 $300,000 $300,000