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Dowell Company produces a single product. Its income statements under absorption costing for its first...

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Accounting

imageimageDowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow.

Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2014 2015 Sales ($44 per unit) Cost of goods sold ($29 per unit) 5 968,000 $ 1,848,000 638,000 1218,000 Gross margin Selling and administrative expenses 330,000 295,000 630,000 345,000 Net income 5 35,000 $ 285,000 Additional Information a. Sales and production data for these first two years follow. 2014 32,000 32,00O 22,000 42,000 2015 Units produced Units sold b. Variable cost per unit and total fixed costs are unchanged during 2014 and 2015. The company's $29 per unit product cost consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($320,000/32,000 units) 10 Total product cost per unit 5 29 c. Selling and administrative expenses consist of the following. 2014 2015 Variable selling and administrative expenses ($2.5 per unit) 55,000 $ 105,000 240,000 240,000 Fixed selling and administrative expenses Total selling and administrative expenses $ 295,000 $ 345,000

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