Problem 5-2
Variable and Full Costing: Sales and Production Fluctuate
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
	2014	2015	2016	Total
Units sold	$ 5,000	$ 5,000	$ 5,000	$ 15,000
Units produced	$ 5,000	$ 6,000	$ 4,000	$ 15,000
Fixed production costs	$ 50,000	$ 50,000	$ 50,000
Variable production costs per unit	$ 75	$ 75	$ 75
Selling price per unit	$ 225	$ 225	$ 225
Fixed selling and administrative expense	$ 5,000	$ 5,000	$ 5,000
Required
a. Calculate profit and the value of ending inventory for each year using full costing. Round cost percent to two decimal places.
b. Explain why profit fluctuates from year to year even though the number of units sold, the selling price, and the cost structure remain constant.
c. Calculate profit and the value of ending inventory for each year using variable costing
d. Explain why, using variable costing, profit does not fluctuate from year to year. **Please post in Excel attachment so I can see the formulas** Thank you :)!