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

		2016			2017
Sales ($44 per unit)	$	1,012,000		$	1,892,000
Cost of goods sold ($29 per unit)		667,000			1,247,000
Gross margin		345,000			645,000
Selling and administrative expenses		291,000			331,000
Net income	$	54,000		$	314,000

Additional Information

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

	2016		2017
Units produced	33,000		33,000
Units sold	23,000		43,000

2. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $29 per unit product cost consists of the following.

Direct materials	$	6
Direct labor		9
Variable overhead		4
Fixed overhead ($330,000/33,000 units)		10
Total product cost per unit	$	29

3. Selling and administrative expenses consist of the following.

		2016			2017
Variable selling and administrative expenses ($2 per unit)	$	46,000		$	86,000
Fixed selling and administrative expenses		245,000			245,000
Total selling and administrative expenses	$	291,000		$	331,000

Problem 19-1A Part 1

1. Complete income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.)

1. Complete income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) 2017 $ 1,892,000 DOWELL Company Variable Costing Income Statements 2016 $ Sales 1,012.000 Plus: Variable costs Direct materials Direct labor Variable overhead Variable selling and administrative expenses Contribution margin Less: Fixed expenses Fixed selling and administrative costs Fixed overhead Net income (loss)