Spencer Electronics produces a wireless home lighting device that allows consumers to turn on home lights from their cars and light a safe path into and through their homes. 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.
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 toyear.

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2013 Total 15,000 45,000 10,000 45,000 2011 2012 15,000 20,000 Units sold 15,000 Units produced 15,000 Fixed production costs $750,000 $750,000 $750,000 Variable production costsper nit 150 150150 250250 250 Selling price per unit Fixed selling and administrative expense $220,000 $220,000 $220,000