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During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two

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During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two years are given: Year 1 Year 2 Units produced 25,000 25,000 Units sold 20,000 30,000 Year 1 Year 2 Sales (at $50 per unit) $1,000,000 $1,500,000 Variable expenses: Variable cost of goods sold (at $20 per unit) 400.000 600,000 Variable selling and administrative costs (at $3 per unit) 60.000 90,000 Total variable expenses 460.000 690,000 Contribution margin 540.000 810,000 Fixed expenses: Fixed manufacturing overhead 350,000 350,000 Fixed selling and administrative 250,000 250,000 Total fixed expenses 600,000 600,000 Operating income (loss) $ (60,000) $ 210,000 The company's $20 unit product cost is computed as follows: Direct materials $ 8 Direct labour 10 Variable manufacturing overhead 2 Unit product cost $20 Prepare an absorption costing income statement for Year 1

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