Firemaster BBQ produces stainless steel propane gas grills. The company has been in operation for 3 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 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 Firemaster could manipulate earnings in 2018 by producing more units than are actually needed to meet demand. Could this approach to earnings management be repeated year after year?

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2018 2017 Total 2019 Units sold Units produced Fixed production costs Variable production costs per unit Selling price per unit Fixed selling and administrative expense 27,000 30,000 30,000 25,000 82,000 22,000 82,000 30,000 $30,000,000 $30,000,000 $30,000,000 1,000 1,000 $ 2,500 1,000 2,500 $ 350,000 2,500 $ 350,000 $ 350,000