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)	620,000	1,240,000
Gross profit	300,000	600,000
Selling and administrative expenses	170,000	220,000
Income	$ 130,000	$ 380,000

Additional Information

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

Units	Year 1	Year 2
Units produced	30,000	30,000
Units sold	20,000	40,000

2. Variable costs per unit and fixed costs per year are unchanged during these years. The companys $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

3. Selling and administrative expenses consist of the following.

Selling and Administrative Expenses	Year 1	Year 2
Variable selling and administrative ($2.50 per unit sold)	$ 50,000	$ 100,000
Fixed selling and administrative	120,000	120,000
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.)

000.00 11 2000