Explain why profit fluctuates from year to year

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Reference no: EM1387191

Q. Hamilton Stage Supplies is a manufacturer of a specialized type of light used in theatres. Information on the first three years of trade 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 expec 45000 4500 4500

1. Compute 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. Compute 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

Reference no: EM1387191

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