Question

Ch 19 Homework or Part 1oz 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) $920,000 $1,840.00 Cost of goods sold (531 per unit) 620,00 1,240,000 Gross margin TANDARD.A99 300, eae Selling and administrative expenses 290, 40.000 Net Income $10.00 $ 260,00 166 points Additional Information a. Sales and production data for these first two years follow data for these first two years follow. for f Units produced Units sold 2016 30.000 20,00 2017 30. see 40, b. Vartable 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 c. Selling and administrative expenses consist of the following. Variable selling and administrative expenses (52.50 per unit) Fixed selling and administrative expenses Total selling and administrative expenses 2016 2017 $ 50.000 $100.000 24.eee 240.000 $290,000 $340,000

Answer 1

1
	2016	2017
Sales	920000	1840000
Less: Variable costs
Direct materials	100000	200000
Direct labor	180000	360000
Variable overhead	140000	280000
Variable selling and administrative expenses	50000	100000
Total variable costs	470000	940000
Contribution margin	450000	900000
Less: Fixed expenses
Fixed overhead	300000	300000
Fixed selling and administrative expenses	240000	240000
Total Fixed expenses	540000	540000
Net income(loss)	(90000)	360000
2
	2016	2017
Variable costing income(loss)	(90000)	360000
Add: Fixed overhead in ending inventory	100000
Less: Fixed overhead in beginning inventory		(100000)
Absorption costing income(loss)	10000	260000
Workings:
	2016	2017
Direct materials	=20000*5	=40000*5
Direct labor	=20000*9	=40000*9
Variable overhead	=20000*7	=40000*7
	2016	2017
Add: Fixed overhead in ending inventory	=10000*10
Less: Fixed overhead in beginning inventory		=10000*10