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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation foll Income Statements (Absorption Costing) Sales ($62 per unit) Cost of goods sold ($49 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 Year 1 51,000 30,000 Year 2 51,000 72,000 Year 1 $ 1,860,000 1,470,000 390,000 275,000 $ 115,000 Direct materials Direct labor Variable overhead Fixed overhead ($459,000/51,000 units) Total product cost per unit b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost using absorption costing consists of the following. $ 14 21 5 9 $ 49 Year 2 $ 4,464,000 3,528,000 936,000 317,000 $ 619,000 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total Required: Prepare income statements for each of these two years under variable costing. Note: Loss amounts should be entered with a minus sign. Year 1 $ 30,000 245,000 $ 275,000 Year 2 $ 72,000 245,000 $ 317,000

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation foll Income Statements (Absorption Costing) Sales ($62 per unit) Cost of goods sold ($49 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 Year 1 51,000 30,000 Year 2 51,000 72,000 Year 1 $ 1,860,000 1,470,000 390,000 275,000 $ 115,000 Direct materials Direct labor Variable overhead Fixed overhead ($459,000/51,000 units) Total product cost per unit b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost using absorption costing consists of the following. $ 14 21 5 9 $ 49 Year 2 $ 4,464,000 3,528,000 936,000 317,000 $ 619,000 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total Required: Prepare income statements for each of these two years under variable costing. Note: Loss amounts should be entered with a minus sign. Year 1 $ 30,000 245,000 $ 275,000 Year 2 $ 72,000 245,000 $ 317,000

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management analysis
Section: Chapter Questions
Problem 9E: The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the...
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Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($62 per unit) Cost of goods sold ($49 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 Year 1 51,000 30,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost using absorption costing consists of the following. Sales Less: Variable expenses Direct materials Direct labor Variable overhead Fixed overhead ($459,000/51,000 units) Total product cost per unit c. Selling and administrative expenses consist of the following. Year 2 51,000 72,000 Contribution margin Less: Fixed expenses Year 1 $ 1,860,000 1,470,000 390,000 275,000 $ 115,000 Variable cost of goods sold Variable selling and administrative expenses Income (Loss) Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total DOWELL Company Income Statements (Varlable Costing) Fixed overhoad Fixed selling and administrative expenses $ 14 Required: Prepare income statements for each of these two years under variable costing. Note: Loss amounts should be entered with a minus sign. 41599 21 $ 49 Year 1 $ 1,860,000 Year 2 $ 4,464,000 3,528,000 936,000 317,000 $ 619,000 Year 2 $ 4,464,000 Year 1 $ 30,000 245,000 $ 275,000 Year 2 $ 72,000 245,000 $ 317,000
Transcribed Image Text:Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($62 per unit) Cost of goods sold ($49 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 Year 1 51,000 30,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $49 per unit product cost using absorption costing consists of the following. Sales Less: Variable expenses Direct materials Direct labor Variable overhead Fixed overhead ($459,000/51,000 units) Total product cost per unit c. Selling and administrative expenses consist of the following. Year 2 51,000 72,000 Contribution margin Less: Fixed expenses Year 1 $ 1,860,000 1,470,000 390,000 275,000 $ 115,000 Variable cost of goods sold Variable selling and administrative expenses Income (Loss) Selling and Administrative Expenses Variable selling and administrative ($1 per unit sold) Fixed selling and administrative Total DOWELL Company Income Statements (Varlable Costing) Fixed overhoad Fixed selling and administrative expenses $ 14 Required: Prepare income statements for each of these two years under variable costing. Note: Loss amounts should be entered with a minus sign. 41599 21 $ 49 Year 1 $ 1,860,000 Year 2 $ 4,464,000 3,528,000 936,000 317,000 $ 619,000 Year 2 $ 4,464,000 Year 1 $ 30,000 245,000 $ 275,000 Year 2 $ 72,000 245,000 $ 317,000
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