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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow Sales ($46 per unit) Cost

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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $1,104,000 $2,024,000 744,000 1,364,000 360,000 660,000 294,000 339,000 $ 66,000 $ 321,000 Additional Information a. Sales and production data for these first two years follow Units produced Units sold 2016 34,000 24,000 2017 34,000 44,000 b. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $31 per unit product cost consists of the following b. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $31 per unit product cost consists of the following. $ 4 Direct materials Direct labor Variable overhead Fixed overhead ($340,000/34,000 units) Total product cost per unit $31 c. Selling and administrative expenses consist of the following Variable selling and administrative expenses ($2.25 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 2016 2017 $ 54,800 $ 99,000 240,000 240,000 $294,000 $339,000 DOWELL Company Variable Costing Income Statements 2016 $1,104,000 2017 $ 2,024,000 Sales 216,000 396,000 Variable overhead Direct materials Direct labor e Variable selling and administrative expenses 216,000 396,000 Total variable costs Contribution margin Less: Fixed expenses Fixed overhead Fixed selling and administrative costs 340.000 340,000 340,000 340,000 Total fixed expenses Net income (loss) 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 (loss) Absorption costing income (loss)

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