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 ($48 per unit)	$ 1,248,000	$ 2,304,000
Cost of goods sold ($35 per unit)	910,000	1,680,000
Gross profit	338,000	624,000
Selling and administrative expenses	304,000	392,000
Income	$ 34,000	$ 232,000

Additional Information

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

Units	Year 1	Year 2
Units produced	37,000	37,000
Units sold	26,000	48,000

2. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $35 per unit product cost using absorption costing consists of the following.

Direct materials	$ 14
Direct labor	7
Variable overhead	3
Fixed overhead ($407,000/37,000 units)	11
Total product cost per unit	$ 35

3. Selling and administrative expenses consist of the following.

Selling and Administrative Expenses	Year 1	Year 2
Variable selling and administrative ($4 per unit sold)	$ 104,000	$ 192,000
Fixed selling and administrative	200,000	200,000
Total	$ 304,000	$ 392,000

Required: Prepare income statements for each of these two years under variable costing.