Dowell Company produces a single product. Its income under variable costing for its firs Variable Costing Income Income Additional Information a. Sales and production data for these first two years follow Unite Units produced Units sold Year 1 37,700 27,000 Year 1 $ 37,000 Year 2 37,700 48,400 Year 2 $ 550,000
Dowell Company produces a single product. Its income under variable costing for its firs Variable Costing Income Income Additional Information a. Sales and production data for these first two years follow Unite Units produced Units sold Year 1 37,700 27,000 Year 1 $ 37,000 Year 2 37,700 48,400 Year 2 $ 550,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text:Dowell Company produces a single product. Its income under variable costing for its first two years of operation follow.
Variable Costing Income
Income
Unita
Units produced
Units sold
Additional Information
a. Sales and production data for these first two years follow.
Year 1
$ 37,000
Year 1
37,700
27,000
Direct materials
Direct labor
Year 2
37,700
48,400
b. The company's $31 per unit product cost (for both years) using absorption costing consists of the following
Variable overhead
Fixed overhead (9370,000/37,000 units)
Total product cost per unit
Year 2
$ 550,000
Variable costing income
Add: Fixed overhead in anding FG inventory
Less Fuad overhead in beginning FO inventory
Absorption costing income
Required:
Prepare a statement to convert variable costing income to absorption costing income for both years. Leave no cells blank - be certain
to enter "0" wherever required.)
10
$.31
Dowell Company
Convert Variable Costing Income to Absorption Costing income
Year 1
S
37.000 $
Year 2
550.000
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