Income Statements (Absorption Costing) Sales ($56 per unit) Cost of goods sold ($44 per unit) Gross profit Selling and administrative expenses Income Additional Information Year 1 $ 1,792,000 a. Sales and production data for these first two years follow. 1,408,000 384,000 Year 2 $ 3,248,000 2,552,000 696,000 402,000 298,000 $ 86,000 $ 294,000 Units Units produced Units sold Year 1 45,000 32,000 Year 2 45,000 58,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $44 per unit product cost using absorption costing consists of the following. Direct materials $ 15 Direct labor 15 Variable overhead 3 Fixed overhead ($495,000/45,000 units) 11 Total product cost per unit $ 44 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($4 per unit sold) Fixed selling and administrative Total $ 128,000 170,000 Year 1 Year 2 $ 232,000 170,000 $ 298,000 $ 402,000 Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) DOWELL Company Income Statements (Variable Costing) Sales Less: Variable expenses Variable cost of goods sold Income (Loss) Year 1 Year 2 $ 1,792,000 $ 3,248,000