The following information is available for Dunworth Canoes, a company that builds inexpensive aluminum canoes:

2014 2015 Total

Units produced 20,480 14,920 35,400 Units sold 17,700 17,700 35,400 Selling price per unit $540 $540 Variable production costs per unit $208.00 $208.00 Direct material per unit $88 $88 Direct labor per unit $42 $42 Variable manufacturing overhead per unit $78 $78 Fixed manufacturing overhead per year $696,320 $696,320 Fixed selling and administrative expense per year $219,800 $219,800

In its first year of operation, the company produced 20,480 units but was able to sell only 17,700 units. In its second year, the company needed to get rid of excess inventory (the extra 2,780 units produced but not sold in 2014) so it cut back production to 14,920 units.

(a)

Calculate profit for both years using full costing. (Round cost per unit to 2 decimal places, e.g. 15.25 and final answers to 0 decimal places, e.g.125.)

2014 2015 Net profit $ $

(b)

Note that profit has declined in 2015. Is company performance actually worse using full costing in 2015 compared to 2014?

(c)

Calculate profit for both years using variable costing.

2014 2015 Net profit $ $

(d)

Does variable costing profit present a more realistic view of firm performance in the two years?