Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.J 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) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses Net income $920,000 $1,840,000 620,000 1, 240,000 300,000 600,000 290,000335,00 $ 10,000 265,000 Additional Information a. Sales and production data for these first two years follow Units produced Units sold 2016 30,000 30,000 20,000 40,000 b. 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 Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) Total product cost per unit 10 $31

Explanation / Answer

Dowell Compant Variable Costing Income Statement 2016($) 2017($) A sales 920000 1840000 B Variable cost of goods sold 420000 840000 C Variable Selling expenses 45000 90000 D=A-(B+C) Contribution 455000 910000 E Fixed Manufacturing expenses 300000 300000 F Fixed Selling Expenses 245000 245000 G= D-(E+F) Net income -90000 365000

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