Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow Sales (548 per unit) Cost of goods sold (533 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $1,088,000 $1,968,888 693,eee 1,353,000 315,000 615, eee 276,750 311,758 $ 38,250 $ 303,258 Additional Information a. Sales and production data for these first two years follow, Units produced Units sold 2816 2017 31,000 31,000 21,000 41,200 b. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $33 per unit product cost consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($310, 098/31, eee units) Total product cost per unit 10 $33 c. Selling and administrative expenses consist of the following: Variable selline and administrative expenses ($1.75 per unit) 2016 2017 $_36.750 5.71.750 Variable selling and administrative expenses ($1.75 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 2016 2017 $ 36,750 $ 71,750 248,000 240,000 $276,758 5311,758 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.) 2017 DOWELL Company Variable Costing Income Statements 2016 Sales Less: Variable costs Direct materials Direct labor Variable overhead Variable selling and administrative expenses Variable selling and administrative expenses Contribution margin Plus: Fixed expenses Fixed overhead Fixed selling and administrative costs Net Income (los) Direct materials Direct labor Variable overhead Fixed overhead ($310,000/31, oee units) Total product cost per unit $ 5 9 9 10 $33 c. Selling and administrative expenses consist of the following Variable selling and administrative expenses (51.75 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 2016 2017 5 36,750 $ 71,750 240,000 240.000 $276,750 $311,758 Problem 19-1A Part 2 2. What are the differences between the absorption costing Income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.) DOWELL COMPANY Reconciliation of Variable Costing income to Absorption Costing Income 2016 2017 Variable costing income (105) Absorption costing income foss)