Dowell Company produces a single product Its income statements under absorption costing for its first two years of operation follow 2018 2019 Sales ($46 per unit) $ 1,058,000 $ 1,978,000 Cost of goods sold ($31 per unit) 713,000 1,333,000 Gross margin 345,000 645,000 Selling and administrative expenses 291,750 336,750 Net income $ 53,250 $ 308,250 Additional Information Sales and production data for these first two years follow 2018 2019 Units produced 33,000 33,000 Units sold 23,000 43,000 Variable cost per unit and total fixed costs are unchanged during 2018 and 2019 The company's $31 per unit product cost consists of the following Direct materials $ 5 Direct labor 9 Variable overhead 7 Fixed overhead ($330,000 33,000 units) 10 Total product cost per unit $ 31 Selling and administrative expenses consist of the following 2018 2019 Variable selling and administrative expenses ($2 25 per unit) $ 51,750 $ 96,750 Fixed selling and administrative expenses 240,000 240,000 Total selling and administrative expenses $ 291,750 $ 336,750 2 Prepare a table as in Exhibit 6 12 to convert variable costing income to absorption costing income for both 2018 and 2019 (Loss amounts should be entered with a minus sign ) Variable costing income (loss) Absorption costing income (loss)

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 24, 2024

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2018 2019 Sales ($46 per

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

2018 2019 Sales ($46 per unit) $ 1,058,000 $ 1,978,000 Cost of goods sold ($31 per unit) 713,000 1,333,000 Gross margin 345,000 645,000 Selling and administrative expenses 291,750 336,750 Net income $ 53,250 $ 308,250

Additional Information

Sales and production data for these first two years follow.
2018 2019 Units produced 33,000 33,000 Units sold 23,000 43,000 Variable cost per unit and total fixed costs are unchanged during 2018 and 2019. The company's $31 per unit product cost consists of the following.
Direct materials $ 5 Direct labor 9 Variable overhead 7 Fixed overhead ($330,000/33,000 units) 10 Total product cost per unit $ 31 Selling and administrative expenses consist of the following.

2018 2019 Variable selling and administrative expenses ($2.25 per unit) $ 51,750 $ 96,750 Fixed selling and administrative expenses 240,000 240,000 Total selling and administrative expenses $ 291,750 $ 336,750

2. Prepare a table as in Exhibit 6.12 to convert variable costing income to absorption costing income for both 2018 and 2019. (Loss amounts should be entered with a minus sign.) Variable costing income (loss) Absorption costing income (loss)