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) $ 3,420,000 2,760,000 660,000 300,000 $360,000 Cost of goods sold ($46 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 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. Direct materials Direct labor Variable overhead 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 Selling and Administrative Expenses Variable selling and administrative ($2 per unit sold) Fixed selling and administrative Total Income (Loss) c. Selling and administrative expenses consist of the following. $16 16 6 8 $ 46 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) $ 3,420,000 2,760,000 660,000 300,000 $360,000 Cost of goods sold ($46 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 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. Direct materials Direct labor Variable overhead 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 Selling and Administrative Expenses Variable selling and administrative ($2 per unit sold) Fixed selling and administrative Total Income (Loss) c. Selling and administrative expenses consist of the following. $16 16 6 8 $ 46 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
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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)
Year 2
Sales ($57 per unit)
$ 3,420,000
2,760,000
660,000
300,000
$360,000
Cost of goods sold ($46 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
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.
Direct materials
Direct labor
Variable overhead
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
Selling and Administrative Expenses
Variable selling and administrative ($2 per unit sold)
Fixed selling and administrative
Total
Income (Loss)
c. Selling and administrative expenses consist of the following.
$16
16
6
8
$ 46
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
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