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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](https://content.bartleby.com/qna-images/question/35b03827-29c4-4fa1-890c-c2ce4a2ec4b5/50c0bd05-4425-4b3a-b19d-f18186b3baf4/gqw0zlf_thumbnail.jpeg)
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](https://content.bartleby.com/qna-images/question/35b03827-29c4-4fa1-890c-c2ce4a2ec4b5/50c0bd05-4425-4b3a-b19d-f18186b3baf4/ic1l0za_thumbnail.png)
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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