Dowell Company produces a single product. Its Income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($56 per unit) Cost of goods sold ($44 per unit) Gross profit Selling and administrative expenses Income Year 1 $ 1,792,000 Year 2 $ 3,248,000 1,488,888 2,552,080 384,880 298,000 696,800 402,000 $ 86,000 $ 294,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Year 1 45,000 32,000 Year 2 45,000 58,000 b. 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 Direct labor Variable overhead Fixed overhead ($495,000/45,000 units) Total product cost per unit $ 15 15 3 11 $ 44 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($4 per unit sold) Fixed selling and administrative Total Year 1 Year 2 $ 128,000 170,000 $ 298,000 $ 232,880 170,000 $ 402,000