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

		2014		2015
Sales ($46 per unit)	$	1,012,000	$	1,932,000
Cost of goods sold ($31 per unit)		682,000		1,302,000
Gross margin		330,000		630,000
Selling and administrative expenses		294,500		339,500
Net income	$	35,500	$	290,500

Additional Information
a.	Sales and production data for these first two years follow.

	2014	2015
Units produced	32,000	32,000
Units sold	22,000	42,000

b.	Variable cost per unit and total fixed costs are unchanged during 2014 and 2015. The company's $31 per unit product cost consists of the following.

Direct materials	$	6
Direct labor		8
Variable overhead		7
Fixed overhead ($320,000/32,000 units)		10
Total product cost per unit	$	31

c.	Selling and administrative expenses consist of the following.

2014

2015

Variable selling and administrative expenses ($2.25 per unit)

$

49,500

$

94,500

Fixed selling and administrative expenses

245,000

245,000

Total selling and administrative expenses

$

294,500

$

339,500

Complete 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
	2014	2015
Net income (loss)

What are the differences between the absorption costing income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.)

DOWELL COMPANY
Reconciliation of Variable Costing Income to Absorption Costing Income
	2014	2015
Variable costing income (loss)
Absorption costing income (loss)