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) $920,000 $1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross margin 300,000 600,000 Selling and administrative 285,000 330,000 expenses Net income $ 15,000 $ 270,000 Additional Information a. Sales and production data for these first two years follow. 2018 2019 Units produced Units sold 30,000 30,000 20,000 40,000 b. 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 Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) Total product cost per unit $ 5 9 7 10 $31 C. Selling and administrative expenses consist of the following. 2018 2019 Variable selling and administrative expenses ($2.25 per unit) Fixed selling and administrative expenses Total selling and administrative expenses $ 45,000 $ 90,000 240,000 240,000 $285,000 $330,000 1. Prepare income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.) DOWELL Company Variable Costing Income Statements 2018 2019 Net income (loss) 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.) DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2018 2019 Variable costing income (loss) Absorption costing income (loss)