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

2012 2013 Sales ($48 per unit) $ 1,152,000 $ 2,112,000 Cost of goods sold ($33 per unit) 792,000 1,452,000 Gross margin 360,000 660,000 Selling and administrative expenses 299,000 344,000 Net income $ 61,000 $ 316,000

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

2012 2013 Units produced 34,000 34,000 Units sold 24,000 44,000

b.

Variable cost per unit and total fixed costs are unchanged during 2012 and 2013. The company's $33 per unit product cost consists of the following.

Direct materials $ 4 Direct labor 9 Variable overhead 10 Fixed overhead ($340,000/34,000 units) 10 Total product cost per unit $ 33

c. Selling and administrative expenses consist of the following.

2012 2013 Variable selling and administrative ($2.25 per unit) $ 54,000 $ 99,000 Fixed selling and administrative 245,000 245,000 Total selling and administrative $ 299,000 $ 344,000

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