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

Income Statements $($Absorption Costing$)$ Year $1$ Year $2$

Sales $($$$46$ per unit$)$ $ $920,000$ $ $1,840,000$

Cost of goods sold $($$$31$ per unit$)620,0001,240,000$

Gross profit $300,000600,000$

Selling and administrative expenses $170,000220,000$

Income $ $130,000$ $ $380,000$

Additional Information

Sales and production data for these first two years follow.

Units Year $1$ Year $2$

Units produced $30,00030,000$

Units sold $20,00040,000$

Variable costs per unit and fixed costs per year are unchanged during these years. The company$$s $$31$ per unit product cost using absorption costing consists of the following.

Direct materials $ $5$

Direct labor $9$

Variable overhead $7$

Fixed overhead $($$$300,000/30,000$ units$)10$

Total product cost per unit $ $31$

Selling and administrative expenses consist of the following.

Selling and Administrative Expenses Year $1$ Year $2$

Variable selling and administrative $($$$2\mathrm{.}50$ per unit sold$)$ $ $50,000$ $ $100,000$

Fixed selling and administrative $120,000120,000$

Total $ $170,000$ $ $220,000$

Required:

Prepare income statements for each of these two years under variable costing. $($Loss amounts should be entered with a minus sign.$)$