Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 20162017 $1,152,000 $2,112,000 Sales ($48 per unit) Cost of goods sold ($33 per unit) Gross margin Selling and administrative expenses Net income 92,000 1,452,000 360,000 660,000 305,000 355,000 $55,000 305,000 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold 2016-1120171 34,000 34,000 24,000 44,000 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 Pixed overhead ($340,000/34,000 units) s 6 10 tai mea costs are uncnangea auring zuio ana aiine companys sss per unit proauct cost consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($340,000/34,000 units) Total product cost per unit 10 $33 c. Selling and administrative expenses consist of the following. Variable selling and administrative expenses (82.5 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 60,000 $110,000 245 000 245,000 $305,000 $355,000 Part 1 of 2 Answer is complete but not entirely correct 35 points DOWELL Company Variable Costing Income Statements 2016 2017 Sales 01.152.000 21 12,000 Less: Variable costs Direct materials Direct labor Variable overhead Variable selling and administrative 144,000264,000 218,000 0 396,000 210.00001 396,0000 48,000 88,0008 Total variable costs Contribution margin Less: Fixed expenses 624,000 1,144,000 552.0001.012.000 Fixed selling and administrative costs Fixed overhead 245,000 245,000 0 340,000340,000 Total fixed expenses 585,000 585,000 Net income (loss) (33,000) $ 427,000 2. What are the differences between the absorption costing income and the variable costing income for these two years? (Lass amounts should be entered with a minus sign.) Answer is complete but not entirely correct. DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2016 2017 Variable costing income (loss) 39,000) 416,000 Add Fixed overhead in ending inventory100,000 Less: inventory Absorption costing income (loss) s Fd overhead in beginning 100.000) s 67.0000$ 327,000