Variable and Full Costing

Finance
October 29, 2020
Psychology
October 29, 2020

Variable and Full Costing Sales Constant but production fluctuates Hamilton Stage Supplies is a manufacturer of a specialized
type of light used in theaters Information on the first three years of
business is as follows

 

2011 2012 2013 total

unit sold 3000 3000 3000 9000

units produced 3000 4500 1500 9000

fixed production cost 45000 45000 45000

variable production cost p/u 75 75 75

selling price per unit 225 225 225

fixed selling and admin expenses 4500 4500 4500

 

1 Calculate profit and the value of ending inventory for
each year using full costing

2 Explain why profit fluctuates from year to year even
though the number of units sold, the selling price, and the cost of structure
remain constant

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

 

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

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