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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow 2016 2017 Sales ($44 per
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow 2016 2017 Sales ($44 per unit) Cost of goods sold ($29 per unit) Gross margin Selling and administrative expenses Net income $968,000 $1,848,000 638, 000 1,218,000 630,000 345,000 $ 35, 000285,000 330,000 295,000 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold 2016 32,000 32,000 22,000 42,000 b. Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $29 per unit product cost consists of the following Direct materials Direct labor Variable overhead Fixed overhead ($320,000/32,000 units) Total product cost per unit 10 $29 c. Selling and administrative expenses consist of the following 2016 2017 Variable selling and administrative expenses ($2.5 per unit) Fixed selling and administrative expenses Total selling and administrative expenses $ 55,000 $105,000 240,000 240,000 $295, 000 $345,000
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