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# Managerial Accounting: Hamilton Stage Supplies Costing

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Managerial Accounting, Third Edition by James Jiambalvo
"Solving Managerial Accounting Problems Using Microsoft Excel or Windows Templates by Rex A Schildhouse"

Problem P5-2 Variable and Full Costing: Sales Constant but Production Fluctuates
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:

2008 2009 2010 Total
Units sold 2,000 2,000 2,000 6,000
Units produced 2,000 3,000 1,000 6,000
Fixed production costs \$30,000 \$30,000 \$30,000
Variable production costs per unit 50 50 50
Selling price per unit 200 200 200
Fixed selling and administrative 4,000 4,000 4,000
expense

Required:
Part a: Calculate profit and the value of ending inventory for each year using full costing.
2008 2009 2010
Fixed manufacturing overhead Amount Amount Amount
Divided by units produced Number Number Number
Title Formula Formula Formula
Title Amount Amount Amount
Full cost per unit Formula Formula Formula

Sales Amount Amount Amount
Less ???
2008 Formula
2009 Formula
2010 Formula
Less ??? Amount Amount Amount
Net income Formula Formula Formula Formula

Ending inventory 2008 Value
Ending inventory 2009 Value
Ending inventory 2010 Value

Part b: 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.

Written response here.

Part c: Calculate profit and the value of ending inventory for each year using variable costing.

2008 2009 2010
Fixed manufacturing overhead Amount Amount Amount
Title Amount Amount Amount

Sales Amount Amount Amount
Title Amount Amount Amount
Title Formula Formula Formula
Less fixed costs:
Title Amount Amount Amount
Title Amount Amount Amount
Net income Formula Formula Formula Formula

Ending inventory 2008 Value
Ending inventory 2009 Value
Ending inventory 2010 Value

Part d: Explain why, using variable costing, profit does not fluctuate from year to year.
Written response here.