19-1A (Static) Variable costing income statement for two consecutive years LO P2 Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross profit Selling and administrative expenses Income Additional Information a. Sales and production data for these first two years follow. Year 1 $ 920,000 Year 2 $ 1,840,000 620,000 1,240,000 300,000 170,000 $ 130,000 $ 380,000 600,000 220,000 Units Units produced Units sold Year 1 30,000 20,000 Year 2 30,000 40,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $31 per unit product cost using absorption costing consists of the following. Direct materials Direct labor Variable overhead Fixed overhead ($300,000/30,000 units) Total product cost per unit $ 5 9 7 10 $ 31 c. Selling and administrative expenses consist of the following. Selling and Administrative Expenses Variable selling and administrative ($2.50 per unit sold) Fixed selling and administrative Total Year 1 $ 50,000 120,000 $ 170,000 Year 2 $ 100,000 120,000 $ 220,000 Required: Prepare income statements for each of these two years under variable costing. (Loss amounts should be entered with a minus sign.) Sales DOWELL Company Income Statements (Variable Costing) Year 1 Year 2 $ 920,000 $ 1,840,000 Less: Variable expenses Variable cost of goods sold Income (Loss)