Firemaster BBQ produces stainless steel propane gas grills. The company has been in operation for three 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 Firemaster could manipulate earnings in 2021 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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2020 2021 2022 Total Units sold 30,000 28,000 27,000 85,000 Units produced 30,000 30,000 25,000 85,000 Fixed production costs $30,000,000 $30,000,000 $30,000,000 Variable production costs per unit $ 1,000 $ 1,000 $ 1,000 Selling price per unit Fixed selling and administrative expense $ 2,500 $ 2,500 $ 2,500 $ 3,500,000 $ 3,500,000 $ 3,500,000