Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Year 2 Sales ($57 per unit) Cost of goods sold ($46 per unit) Gross profit $ 3,420,000 2,760,000 660,000 300,000 Selling and administrative expenses Income $360,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Direct materials Direct labor Variable overhead Year 1 46,000 32,000 Year 2 46, 000 60, 000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $46 per unit product cost using absorption costing consists of the following. Fixed overhead ($368,000/46,000 units) Total product cost per unit Year 1 $ 1,824, 000 1,472,000 352, 000 244, 000 $ 108,000 Income (Loss) c. Selling and administrative expenses consist of the following. $ 16 16 6 8 $ 46 Selling and Administrative Expenses Variable selling and administrative ($2 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 $ 64,000 180,000 $ 244,000 Year 2 Year 2 $ 120,000 180,000 $ 300,000
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Year 2 Sales ($57 per unit) Cost of goods sold ($46 per unit) Gross profit $ 3,420,000 2,760,000 660,000 300,000 Selling and administrative expenses Income $360,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Direct materials Direct labor Variable overhead Year 1 46,000 32,000 Year 2 46, 000 60, 000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $46 per unit product cost using absorption costing consists of the following. Fixed overhead ($368,000/46,000 units) Total product cost per unit Year 1 $ 1,824, 000 1,472,000 352, 000 244, 000 $ 108,000 Income (Loss) c. Selling and administrative expenses consist of the following. $ 16 16 6 8 $ 46 Selling and Administrative Expenses Variable selling and administrative ($2 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 $ 64,000 180,000 $ 244,000 Year 2 Year 2 $ 120,000 180,000 $ 300,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
1
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)
Year 2
Sales ($57 per unit)
Cost of goods sold ($46 per unit)
Gross profit
$ 3,420,000
2,760,000
660,000
300,000
Selling and administrative expenses
Income
$360,000
Additional Information
a. Sales and production data for these first two years follow.
Units
Units produced
Units sold
Direct materials
Direct labor
Variable overhead
Year 1
46,000
32,000
Year 2
46, 000
60, 000
b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $46 per unit product cost using
absorption costing consists of the following.
Fixed overhead ($368,000/46,000 units)
Total product cost per unit
Year 1
$ 1,824, 000
1,472,000
352, 000
244, 000
$ 108,000
Income (Loss)
c. Selling and administrative expenses consist of the following.
$ 16
16
6
8
$ 46
Selling and Administrative Expenses
Variable selling and administrative ($2 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
$ 64,000
180,000
$ 244,000
Year 2
Year 2
$ 120,000
180,000
$ 300,000
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education