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 ($33 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $1,008,eee $1,968, eee 693,000 1,353, eee 315,000 615,000 287,250 332,250 $ 27,750 $ 282,750 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold 2016 31,880 21, eee 2017 31,800 41, eee 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, 680/31, eee units) Total product cost per unit 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 $ 47,250 $ 92,250 240,000 240,000 $287,250 $332,250 DOWELL Company Variable Costing Income Statements 2016 2017 1,008,000 1,968,000 Sales Less: Variable costs Variable overhead Variable selling and administrative expenses 483,000 47,250 943,000 92,250 530,250 477,750 1,035,250 932,750 Total variable costs Contribution margin Less: Fixed expenses Fixed overhead Fixed selling and administrative costs 310,000 240,000 310,000 240,000