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 ($47 per unit)	$ 1,175,000	$ 2,209,000
Cost of goods sold ($33 per unit)	825,000	1,551,000
Gross profit	350,000	658,000
Selling and administrative expenses	285,000	351,000
Income	$ 65,000	$ 307,000

Additional Information

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

Units	Year 1	Year 2
Units produced	36,000	36,000
Units sold	25,000	47,000

2. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $33 per unit product cost using absorption costing consists of the following.

Direct materials	$ 13
Direct labor	6
Variable overhead	4
Fixed overhead ($360,000/36,000 units)	10
Total product cost per unit	$ 33

3. Selling and administrative expenses consist of the following.

Selling and Administrative Expenses	Year 1	Year 2
Variable selling and administrative ($3 per unit sold)	$ 75,000	$ 141,000
Fixed selling and administrative	210,000	210,000
Total	$ 285,000	$ 351,000

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	$1,175,000	$2,209,000
Less: Variable expenses
Variable cost of goods sold
Variable selling and administrative expenses	75,000	141,000
options: fixed overhead, fixed selling and admin. expenses, sales, variable cost of goods sold, variable selling and admin. expenses
Contribution margin
Less: Fixed expenses
Fixed overhead
Fixed selling and administrative expenses	210,000	210,000
options: fixed overhead, fixed selling and admin. expenses, sales, variable cost of goods sold, variable selling and admin. expenses
Income (Loss)