Probiem 19-1A Vanable costuing income statement and conversion to absorption cos
ID: 2541311 • Letter: P
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Probiem 19-1A Vanable costuing income statement and conversion to absorption costing income (two consecutv The following information applies to the questions displayed below Dowell Company produces a single product. Its income statements under absorption costing for lts first two years of operation follow Sales ($48 per unit Cost of goods sold ($33 per unit $ 1152,000 $ 2,12.000 92,000 1452,000 Gross margin Selling and administrative expenses 360,000 660.000 282,000 317000 Net Income $ 78,000 S 343,000 AddiDionel Information a Sales and production data for these first two years follow Units produced Units sokd 2014 2015 34000 34,000 24,000 44000 b Variable cost per unit and total fisxed costs are unchanged during 2014 and unit product cost consists of the folowing Direct maneras Fixed overheona ($340.000/34,000 unts) Total product cost per unit s 33 c. Seling and administraive expenses consist of the following expenses consist of me tollowing Variable seling and administrarive expenses ($175 per unit s 42.000 5 72000 240000 240.000 Fxed selling and administrative expenses Total selling and administrative experdes S 282.000 s 317000 MacBook Ai 2 3 4 5 6Explanation / Answer
1 2014 2015 Sales $ 1,152,000 $ 2,112,000 Less: variable costs Direct material $ 144,000 $ 264,000 Direct labor $ 192,000 $ 352,000 Variable overhead $ 216,000 $ 396,000 Variable S&A $ 42,000 $ 77,000 Contribution margin $ 558,000 $ 1,023,000 Less: Fixed expenses Fixed expenses $ 340,000 $ 340,000 S&A expenses $ 240,000 $ 240,000 Net Income $ (22,000) $ 443,000 2 Year 1 Year 2 Variable cost net operating income $ (22,000) $ 443,000 Adjustment for FIXED manufacturing overhead $ 100,000 $ (100,000) Absorption costing net operating income $ 78,000 $ 343,000
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