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 ($56 per unit) $ 1,792,000 $ 3,248,000 Cost of goods sold ($44 per unit) 1,408,000 2,552,000 Gross profit 384,000 696,000 Selling and administrative expenses 298,000 402,000 Income $ 86,000 $ 294,000 Additional Information Sales and production data for these first two years follow. Units Year 1 Year 2 Units produced 45,000 45,000 Units sold 32,000 58,000 Variable costs per unit and fixed costs per year are unchanged during these years. The company's $44 per unit product cost using absorption costing consists of the following. Direct materials $ 15 Direct labor 15 Variable overhead 3 Fixed overhead ($495,000/45,000 units) 11 Total product cost per unit $ 44 Selling and administrative expenses consist of the following. Selling and Administrative Expenses Year 1 Year 2 Variable selling and administrative ($4 per unit sold) $ 128,000 $ 232,000 Fixed selling and administrative 170,000 170,000 Total $ 298,000 $ 402,000 Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)

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