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Required information [The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its

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Required information [The following information applies to the questions displayed below.] Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses $920,000 $1,840,000 620,000 1,240,000 600,000 335,000 300,000 290,000 10,000 $ 265,000 Net income Additional Information a. Sales and production data for these first two years follow. 2016 2017 30,000 40,000 Units produced Units sold 30,000 20,000 unchanged during 2016 and 2017. The company's $31 b. Variable cost per unit and total fixed costs are per unit product cost consists of the following. Direct materials 4 Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) 10 $31 Total product cost per unit c. Selling and administrative expenses consist of the following. 2016 2017 45,000 90,000 Variable selling and administrative expenses ($2.25 per unit) Fixed selling and administrative expenses 245,000 245,000 $290,000 $335,000 Total selling and administrative expenses 2. What are the differences between the absorption costing income and the variable costing income for these two years? 2. What are the differences between the absorption costing income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.) DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2016 2017 Variable costing income (loss) Absorption costing income (loss)

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