The following information is available for Skipper Pools, a manufacturer of above-ground swimming pool kits:

In its first year of operation, the company produced 10,000 units but was able to sell only 9,000 units. In its second year, the company needed to get rid of excess inventory (the extra 1,000 units produced but not sold in 2011), so it cut back production to 8,000 units.

Required
a. Calculate profit for both years using full costing.
b. Note that profit has declined in 2012.Is company performance actually worse in 2012 compared to 2011?
c. Calculate profit for both years using variable costing.
d. Does variable costing profit present a more realistic view of firm performance in the two years?Explain.

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2011 2012 Units produced Units sold Selling price per unit Direct material per unit Direct labor per unit 8,000 9,000 4,000 4,000 $800 $1,500 1,500 300 $2,400,000 $2,400,000 10,000 18,000 18,000 9,000 $800 Variable manufacturing overhead per unit 300 Fixed manufacturing overhead per year Fixed selling and administrative expense per year $1,500,000 1,500,000