Dowell Company produces a single product. Its income statements under absorption costing for its first two years

Question:

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

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Additional Information

a. Sales and production data for these first two years follow.

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b. Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company?s $31 per unit product cost consists of the following.

Direct materials ............................................................... $ 5Direct labor ......................................................................... 9Variable overhead .............................................................. 7Fixed overhead ($300,000?30,000 units) ........................ 10Total product cost per unit ............................................ $31

c. Selling and administrative expenses consist of the following.

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Required

1. Prepare income statements for the company for each of its first two years under variable costing.

2. Prepare a table as in Exhibit 6.12 to convert variable costing income to absorption costing income for both 2018 and 2019.

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Related Book For  book-img-for-question

Managerial Accounting

ISBN: 978-1260482935

7th edition

Authors: John J Wild, Ken W. Shaw, Barbara Chiappetta

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