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 ($46 per unit)Year 1$920,000620,000300,000170,000$ 130,000Cost of goods sold ($31 per unit)Gross profitSelling and administrative expensesIncomeAdditional Informationa. Sales and production data for these first two years follow.UnitsUnits producedUnits soldDirect materialsDirect laborVariable overheadYear 130,00020,000b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $31 per unit product cost usingabsorption costing consists of the following.Fixed overhead ($300,000/30,000 units)Total product cost per unitYear 230,00040,000Income (Loss)$59c. Selling and administrative expenses consist of the following.10$31Selling and Administrative ExpensesVariable selling and administrative ($2.50 per unit sold)Fixed selling and administrativeTotalDOWELL CompanyIncome Statements (Variable Costing)Year 2$ 1,840,0001,240,000600,000220,000$ 380,000Required:Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)Year 1Year 2Year 1$ 50,000120,000$ 170,000Year 2$ 100,000120,000$ 220,000

Answered: Required: Prepare income statements for…

Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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