Dorilane Company-NEW Cost Structure Change New Per unit/set or Cost Notes Sales Variable Costs: Direct Material Increase by $40 443 Per unit Decrease by 8% 104.59 Per unit Direct Labor Variable Overhead Variable S&A Total Variable Costs Fixed Overhead Fixed S&A Total Fixed Costs Increase by 12% Decrease $ 0.30 per unit Increase by $ 0.25 per unit 26.824 Per unit 4.44 Per unit 46.04 Per unit 181.894 Per unit Increase by $300,000 577 000 Total Ss Increase by 150,000 247000 Total Ss 824 000 Total Ss Variable Costs: Direct Material Direct Labor Variable Overhead Variable S&A Total Variable Costs Fixed Overhead Fixed S&A Total Fixed Costs Total Costs Dorilane Company - Summary of Cost Structure Total Dollars Per unit/set (show 2 decimals) Notes 432000 91,000 113.68 23.95 per unit per unit 18 000 4.74 Per unit 174.000 45.79 per unit 715000 188.16 277000 97000 ber unit Totals totals 374000 1089000 7) For the first few years of the expansion, Dorilane Company is planning to produce a different number of units than they will sell. Management would like to see the impact that will have on their income statements. Dorilane plans the following sales and production levels. Sales of sets/units Production of sets/units Year 1 6,000 7,000 Year 3 Year 4 7,000 8,000 8,000 8,000 a) Using variable costing, complete the table below to calculated variable unit product costs. Assume Dorilane uses weighted-average inventory costing. Refer to item 3 of Lecture Packet 1.3. Dorilane Company (with NEW cost structure) Variable Costing-Product Costs only!!!! Variable cost in dollars 7,000 Units Produced 6,000 units Sold Year I 8,000 units Produced and 7,000 Sold Year 2 8,000 Units Produced End 8,000 units Sold Year 3 Variable cost per unit Expense (VCOGS) Inventory b) Complete the contribution margin income statements below. Refer to item 5 of Lecture Packet 1.3. Dorilane Company Income Statement (Variable Costing) For Years ending December 31 Sales revenue Total Variable expenses Contribution Margin Total Fixed expenses Net Operating Income Year 1 Year 2 Year 3 c) Using absorption costing, complete the table below calculating the "unit product cost". Assume Dorilane uses costing method. Refer to item 3 of Lecture Packet 1.3. LIFO Dorilane Company (with NEW cost structure) Absorption Costing-Product Costs 7,000 units Produced and 6,000 8,000 units Produced 8,000 units Produced units Sold Year 1 and 7,000 units Sold and 8,000 units Sold Year 2 Year 3 Costs in dollars: Variable costs Fixed costs Total product costs Cost per unit: Variable cost Fixed cost Total product cost per unit Expense: From prior year inventory From current year production Total Expense (COGS) Inventory-end of year d) Prepare absorption costing income statements for Dorilane. Refer to item 5 of Lecture Packet 1.3 Dorilane Income Statement (Absorption Costing) For Years ending December 31 Year 1 Year 3 Year 3 Sales revenue Cost of Goods Sold Gross Margin Selling & Admin Expenses Net Operating Income e) Since financial statements reported to creditors and investors use the absorption costing method, should Dorilane Company be concerned about net income reported on the income statement? Use complete sentences and 30 to 50 words in your