Superior Electronics produces a wireless home security device that allows consumers to arm/disarm their security system from their cars. Information on the first three years of business is as follows:

2011 2012 2013 Total

Units sold 20,000 20,000 20,000 60,000

Units produced 20,000 25,000 15,000 60,000

Fixed production costs $500,000 $500,000 $500,000

Variable production costs per unit $100 `$100 $100

Selling price per unit $200 $200 $200

Fixed selling and administrative

expense $150,000 $150,000 $150,000

Calculate profit and the value of ending inventory for each year using variable costing.

Explain why, using variable costing, profit does not fluctuate from year to year.