Dowell Company produces a single product. Its income statements under absorption costing for its first two...
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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 Additional Information Year 1 $ 1,792,000 Year 2 $ 3,248,000 1,408,000 2,552,000 384,000 298,000 696,000 402,000 $ 86,000 $ 294,000 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 $ 15 Direct labor 15 Variable overhead 3 Fixed overhead ($495,000/45,000 units) 11 Total product cost per unit $ 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 $ 128,000 170,000 $ 298,000 Year 2 $ 232,000 170,000 $ 402,000 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 Additional Information Year 1 $ 1,792,000 Year 2 $ 3,248,000 1,408,000 2,552,000 384,000 298,000 696,000 402,000 $ 86,000 $ 294,000 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 $ 15 Direct labor 15 Variable overhead 3 Fixed overhead ($495,000/45,000 units) 11 Total product cost per unit $ 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 $ 128,000 170,000 $ 298,000 Year 2 $ 232,000 170,000 $ 402,000
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