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##### (Solved) (Latest ver. Aug 2020) - 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:

200820092010Total
Units sold2,000 2,000 2,000 6,000
Units produced2,000 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 AmountAmountAmount
Less ???
2008Formula
2009Formula
2010Formula
Less ??? AmountAmountAmount
Net incomeFormulaFormulaFormulaFormula

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

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.

200820092010
Title Amount Amount Amount

Sales AmountAmountAmount
Title AmountAmountAmount
Title FormulaFormulaFormula
Less fixed costs:
TitleAmountAmountAmount
TitleAmountAmountAmount
Net incomeFormulaFormulaFormulaFormula

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

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

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