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Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow. Additional information a. Sales and production
Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow. Additional information a. Sales and production data for these first two years follow. b. The company's $31 per unit product cost (for both years) using absorption costing consists of the following. Required: Prepare a statement to convert variable costing income to absorption costing income for both years, (Leave no cells blank-be certain to enter "O" wherever required.) manufacturer reports direct materials of $5 per unit, direct labor of $2 per unit, and variable overhead of $3 per unit. Fixed overhead $120,000 per year, and the company estimates sales of 12,000 units at a sales price of $25 per unit for the year. The company has no beginning finished goods inventory. 1. If the company uses absorption costing, compute gross profit assuming (a) 12,000 units are produced and 12,000 units are sold and (b) 15,000 units are produced and 12,000 units are sold. 2. If the company uses variable costing, how much would contribution margin differ if the company produced 15,000 units instead of producing 12,000? Assume the company sells 12,000 units. Hint: Calculations are not required. Complete this question by entering your answers in the tabs below. If the company uses absorption costing, compute gross profit assuming (o) 12,000 units are produced and 12,000 units are sold and (b)15,000 units are produced and 12,000 units are sold
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