Dowell Company produces a single product. Its income statements under absorption
ID: 2337349 • Letter: D
Question
Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. 2016 2017 Sales ($46 per unit) $ 966,000 $ 1,886,000 Cost of goods sold ($31 per unit) 651,000 1,271,000 Gross margin 315,000 615,000 Selling and administrative expenses 282,000 322,000 Net income $ 33,000 $ 293,000 Additional Information Sales and production data for these first two years follow. 2016 2017 Units produced 31,000 31,000 Units sold 21,000 41,000 Variable cost per unit and total fixed costs are unchanged during 2016 and 2017. The company's $31 per unit product cost consists of the following. Direct materials $ 4 Direct labor 8 Variable overhead 9 Fixed overhead ($310,000/31,000 units) 10 Total product cost per unit $ 31 Selling and administrative expenses consist of the following. 2016 2017 Variable selling and administrative expenses ($2 per unit) $ 42,000 $ 82,000 Fixed selling and administrative expenses 240,000 240,000 Total selling and administrative expenses $ 282,000 $ 322,000 1. Complete income statements for the company for each of its first two years under variable costing. (Loss amounts should be entered with a minus sign.)
Explanation / Answer
(Amounts in $)
Dowel Company
Income Statement
2017
2016
Sales
1,886,000
966,000
Variable expenses:
Direct materials(31000*4)
124,000
124,000
Direct labor(31000*8)
248,000
248,000
Variable overhead(31000*9)
279,000
279,000
Selling and administrative expenses
82,000
42,000
Contribution Margin
1,153,000
273,000
Less: Fixed Cost
Fixed manufacturing overhead
310,000
310,000
Fixed selling and Administrative expenses
240,000
240,000
Net Profit/(Loss)
603,000
(277,000)
Dowel Company
Income Statement
2017
2016
Sales
1,886,000
966,000
Variable expenses:
Direct materials(31000*4)
124,000
124,000
Direct labor(31000*8)
248,000
248,000
Variable overhead(31000*9)
279,000
279,000
Selling and administrative expenses
82,000
42,000
Contribution Margin
1,153,000
273,000
Less: Fixed Cost
Fixed manufacturing overhead
310,000
310,000
Fixed selling and Administrative expenses
240,000
240,000
Net Profit/(Loss)
603,000
(277,000)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.