Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Year 2 Income Statements (Absorption Costing) Sales ($54 per unit) $ 3,132,000 2,320,000 812,000 323,000 $ 489,000 Cost of goods sold ($40 per unit) Gross profit Selling and administrative expenses Income Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Direct materials Direct labor Year 1 43,000 28,000 Year 2 43,000 58,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $40 per unit product cost using absorption costing consists of the following. Year 1 $ 1,512,000 1,120,000 392,000 293,000 $ 99,000 Income (Loss) Variable overhead Fixed overhead ($387,000/43,000 units) Total product cost per unit $ 40 c. Selling and administrative expenses consist of the following. $ 13 13 Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total DOWELL Company Income Statements (Variable Costing) Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) Year 1 Year 1 $ 28,000 265,000 $ 293,000 Year 2 Year 2 $ 58,000 265,000 $ 323,000
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Year 2 Income Statements (Absorption Costing) Sales ($54 per unit) $ 3,132,000 2,320,000 812,000 323,000 $ 489,000 Cost of goods sold ($40 per unit) Gross profit Selling and administrative expenses Income Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Direct materials Direct labor Year 1 43,000 28,000 Year 2 43,000 58,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $40 per unit product cost using absorption costing consists of the following. Year 1 $ 1,512,000 1,120,000 392,000 293,000 $ 99,000 Income (Loss) Variable overhead Fixed overhead ($387,000/43,000 units) Total product cost per unit $ 40 c. Selling and administrative expenses consist of the following. $ 13 13 Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total DOWELL Company Income Statements (Variable Costing) Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) Year 1 Year 1 $ 28,000 265,000 $ 293,000 Year 2 Year 2 $ 58,000 265,000 $ 323,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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please remember answer with explanation , computation for all steps answer in text form please provide explanation and computation for all steps clearly
Transcribed Image Text:Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.
Year 2
Income Statements (Absorption Costing)
Sales ($54 per unit)
$ 3,132,000
2,320,000
812,000
323,000
$ 489,000
Cost of goods sold ($40 per unit)
Gross profit
Selling and administrative expenses
Income
Additional Information
a. Sales and production data for these first two years follow.
Units
Units produced
Units sold
Direct materials
Direct labor
Year 1
43,000
28,000
Year 2
43,000
58,000
b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $40 per unit product cost using
absorption costing consists of the following.
Year 1
$ 1,512,000
1,120,000
392,000
293,000
$ 99,000
Income (Loss)
Variable overhead
Fixed overhead ($387,000/43,000 units)
Total product cost per unit
$ 40
c. Selling and administrative expenses consist of the following.
$ 13
13
Selling and Administrative Expenses
Variable selling and administrative ($1 per unit sold)
Fixed selling and administrative
Total
DOWELL Company
Income Statements (Variable Costing)
Required:
Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)
Year 1
Year 1
$ 28,000
265,000
$ 293,000
Year 2
Year 2
$ 58,000
265,000
$ 323,000
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