FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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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 ($63 per unit)
Cost of goods sold ($51 per unit)
Year 2
$ 4,284,000
3,468,000
816,000
394,000
Gross profit
Selling and administrative expenses
Income
$ 422,000
Additional Information
a. Sales and production data for these first two years follow.
Units
Units produced
Units sold
Year 1
Direct materials:
Direct labori
52,000
36,000
Year 2
52,000
68,000
Year 1
$ 2,268,000
1,836,000
432,000
298,000
$ 134,000
b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $51 per unit product cost using
absorption costing consists of the following.
Variable overhead
Fixed overhead ($520,000/52,000 units)
Total product cost per unit
$ 15
22
4
10
$ 51
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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) Sales ($63 per unit) Cost of goods sold ($51 per unit) Year 2 $ 4,284,000 3,468,000 816,000 394,000 Gross profit Selling and administrative expenses Income $ 422,000 Additional Information a. Sales and production data for these first two years follow. Units Units produced Units sold Year 1 Direct materials: Direct labori 52,000 36,000 Year 2 52,000 68,000 Year 1 $ 2,268,000 1,836,000 432,000 298,000 $ 134,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $51 per unit product cost using absorption costing consists of the following. Variable overhead Fixed overhead ($520,000/52,000 units) Total product cost per unit $ 15 22 4 10 $ 51
c. Selling and administrative expenses consist of the following.
Selling and Administrative Expenses
Variable selling and administrative ($3 per unit sold)
Fixed selling and administrative
Total
S
DOWELL Company
Income Statements (Variable Costing)
Ċ
Year 1
Required:
Prepare Income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.)
Year 1
$ 108,000
190,000
$ 298,000
Year 2
Year 2
$ 204,000
190,000
$ 394,000
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Transcribed Image Text:c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($3 per unit sold) Fixed selling and administrative Total S DOWELL Company Income Statements (Variable Costing) Ċ Year 1 Required: Prepare Income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) Year 1 $ 108,000 190,000 $ 298,000 Year 2 Year 2 $ 204,000 190,000 $ 394,000
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