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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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