90.2K

Verified Solution

Link Copied!

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $1,012,000 $1,932,000 682,000 1,302,000 330,000 630,000 300,000 350,000 $ 30,000 $ 280,000 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold 2016 2017 32,000 32,000 22,000 42,000 b. Variable per unit and total fixed costs are unchanged during 2016 and 2017. The cost consists of the following. any's $31 per unit product Direct materials Direct labor Variable overhead Fixed overhead ($320,000/32,000 units) Total product cost per unit $ 5 8 8 10 $31 C. Selling and administrative expenses consist of the following. Variable selling and administrative expenses ($2.5 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 2016 2017 $ 55,000 $105,000 245,000 245,000 $300,000 $350,000 DOWELL Company Variable Costing Income Statements 2016 $ 1,012,000 2017 Sales $ 1,932,000 Net income (loss) 2. What are the differences between the absorption costing income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.) DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2016 2017 Variable costing income (loss) Absorption costing income (loss)

Answer & Explanation Solved by verified expert

See Answer