nnecthtmltreturniUrl ht atiorcom2rpaamweb2F Dowell Company p

nnect.htmltreturniUrl ht atior.com%2rpaamweb%2F Dowell Company produces a single product. Its income statements under absorption costing for its first two years cf operation follow Sales ($46 per unit) Cost of goods sold (531 per unit) Gross margin Selling and adninistrative expenses Net Incone $1,012,009 $1,932,000 682,9091.982,90e 130,009 63,000 46,5e8 $ 311,580 Additional Informationn a. Sales and production data for these first two years follow Units produced Units sold 32,099 32,000 22,000 42,008 b. Variable cost per unit and total foxed costs are unchanged during 2016 and 2017. The company\'s $31 per unit product cost consists of the following Direct materials Direct labor Varlable overhead Fixed overhead ($320,800/32,000 units) Total product cost per unit 1e 531 c Selling and administrative expenses consist of the following Variable selling and adainistrative expenses ($1.75 per unit) Fixed selling and adenistrative expenses 38,500 73,500 245,800 245,0 283,500 $318,500 Total selling and adeinistrative expenses Prey 5 6 7 Next > rch

Solution

1

Complete income statements for the company for each of its two years under variable costing

DOWELL Company

Variable Costing income statements

2016

2017

Sales

1012000

1932000

Less: Variable costs

     Direct Materials

110000

210000

     Direct Labor

198000

378000

     Variable overhead

154000

294000

     Varible selling and administrative overhead

38500

73500

Total variable costs

500500

955500

Contribution Margin

511500

976500

Less: Fixed expenses

     Fixed selling and administrative costs

245000

245000

     Fixed overhead (32000*10)

320000

320000

Total Fixed expenses

565000

565000

Net income (loss)

-53500

411500

1	Complete income statements for the company for each of its two years under variable costing
	DOWELL Company
	Variable Costing income statements
		2016	2017
	Sales	1012000	1932000
	Less: Variable costs
	Direct Materials	110000	210000
	Direct Labor	198000	378000
	Variable overhead	154000	294000
	Varible selling and administrative overhead	38500	73500
	Total variable costs	500500	955500
	Contribution Margin	511500	976500
	Less: Fixed expenses
	Fixed selling and administrative costs	245000	245000
	Fixed overhead (32000*10)	320000	320000
	Total Fixed expenses	565000	565000
	Net income (loss)	-53500	411500