Sampson Steel produces high-quality worktables. The company has been in operation for three years, and sales have declined each year due to increased competition. The following information is available:

Required
a. Calculate profit and the value of ending inventory (using LIFO) for each year under full costing.
b. Calculate profit and the value of ending inventory for each year under variable costing.
c. Explain how management of Sampson could manipulate earnings in 2012 by producing more units than are actually needed to meet demand. Could this approach to earnings management be repeated year afteryear?

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Total 24,000 24,000 2011 2012 2013 Units sold Units produced Fixed production costs Variable production costs 7,000 6,000 360,000 360,000 $360,000 9,000 9,000 8,000 9,000 $100 100 per unit Selling price per unit Fixed selling and administrative $100 100 $350 350350 expenses $300,000 300,000 $300,000