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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) Year
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 ($57 per unit) $ 1,824, eee $ 3,420, 8e8 Cost of goods sold ($45 per unit) 1,472,eee 2,760, eee Gross profit 352,eee 660, een Selling and administrative expenses 244,000 380, eee Income $ 188,888 $ 360, Bee Additional Information .. Sales and production data for these first two years follow. Units Units produced Units sold Year 1 46,888 32,000 Year 2 46,080 68,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $46 per unit product cost using absorption costing consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($368,000/46,eee units) Total product cost per unit $ 16 16 6 8 $ 46 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($2 per unit sold) Fixed selling and administrative Total Year 1 $ 64, eee 180,000 $ 244,00 Year 2 $ 120,eee 189,000 $ 308,888 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 Less: Variable expenses Variable cost of goods sold Income (Loss)
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