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Jay & Jay Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption
Jay & Jay Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Year 1 Year 2 Sales ($46 per unit) $ 920,000 $ 1,840,000 Cost of goods sold ($31 per unit) 620,000 1,240,000 Gross profit 300,000 600,000 Selling and administrative expenses 170,000 220,000 Income $ 130,000 $ 380,000 Additional Information Sales and production data for these first two years follow. Units Year 1 Year 2 Units produced 30,000 30,000 Units sold 20,000 40,000 Variable costs per unit and fixed costs per year are unchanged during these years. The companys $31 per unit product cost using absorption costing consists of the following. Direct materials $ 5 Direct labor
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