The following information is available for Dunworth Canoes, a company that builds inexpensive aluminum canoes: 

In its first year of operation, the company produced 21,000 units but was able to sell only 18,000 units. In its second year, the company needed to get rid of excess inventory (the extra 3,000 units produced but not sold in 2020) so it cut back production to 15,000 units. 

Required 

a. Calculate profit for both years using full costing. 

b. Note that profit has declined in 2021. Is company performance actually worse in 2021 compared to 2020? 

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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2020 2021 Total Units produced 21,000 15,000 36,000 Units sold 18,000 18,000 36,000 Selling price per unit $ 500 $ 500 Variable production costs per unit Direct material per unit $ 200 $ 200 $ 80 $ 80 Direct labor per unit $ 50 $ 50 Variable manufacturing overhead per unit Fixed manufacturing overhead per year $ 70 $ 70 $630,000 $630,000 Fixed selling and administrative expense per year $200,000 $200,000