Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

Income Statements (Absorption Costing)	Year 1	Year 2
Sales ($49 per unit)	$ 1,323,000	$ 2,401,000
Cost of goods sold ($37 per unit)	999,000	1,813,000
Gross profit	324,000	588,000
Selling and administrative expenses	264,000	308,000
Income	$ 60,000	$ 280,000

Additional Information

1. Sales and production data for these first two years follow.

Units	Year 1	Year 2
Units produced	38,000	38,000
Units sold	27,000	49,000

2. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $37 per unit product cost using absorption costing consists of the following.

Direct materials	$ 15
Direct labor	8
Variable overhead	6
Fixed overhead ($304,000/38,000 units)	8
Total product cost per unit	$ 37

3. Selling and administrative expenses consist of the following.

Selling and Administrative Expenses	Year 1	Year 2
Variable selling and administrative ($2 per unit sold)	$ 54,000	$ 98,000
Fixed selling and administrative	210,000	210,000
Total	$ 264,000	$ 308,000

Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)

DOWELL Company
Income Statements (Variable Costing)
	Year 1	Year 2
Sales	$1,323,000	$2,401,000
Less: Fixed expenses
Variable cost of goods sold	(999,000)	(1,813,000)
Variable selling and administrative expenses	(264,000)	(308,000)
Contribution margin	60,000	280,000
Less: Fixed expenses
Fixed overhead	304,000	304,000
Fixed selling and administrative expenses	210,000	210,000
Income (Loss)	$(454,000)	$(234,000)