Dowell Company produces a single product. Its income statements under absorption two years of operation follow.

Additional Information
a. Sales and production data for these first two years follow.

b. Variable cost per unit and total fixed costs are unchanged during 2014 and 2015. The company's $31 per unit product cost consists of the following.
Direct materials................................................$ 5
Direct labor.......................................................9
Variable overhead................................................7
Fixed overhead ($300,000/30,000 units)...................10
Total product cost per unit..................................$31
c. Selling and administrative expenses consist of the following.

Required
1. Prepare income statements for the company for each of its first two years under variable costing.
2. Explain any difference between the absorption costing income and the variable costing income for these two years.

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2014 2015 Sales ($46 per unit). .. Cost of goods sold ($31 per unit) $920,000 $1,840,000 620.000 1.240.000 00,000 600,000 290,000340,000 $ 10,000 $ 260,000 Selling and administrative expenses . . . . 2014 Units produced . .. Units sold 2015 30,000 40,000 30,000 20,000 2014 2015 Variable selling and administrative expenses ($2.50 per unit) Fixed selling and administrative expenses..... . . . . . 50,000 $100,000 240,000 240,000 $290,000 $340,000