nnect.htmltreturniUrl ht atior.com%2rpaamweb%2F Dowell Company produces a single

ID: 2406320 • Letter: N

Question

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

Explanation / Answer

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

Fixed overhead (32000*10)

320000

Total Fixed expenses

565000

Net income (loss)

-53500

411500