Problem $19-1$A $($Algo$)$ Variable costing income statement for two consecutive years LO P$2$

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

Income Statements $($Absorption Costing$)$ Year $1$ Year $2$

Sales $($$$46$ per unit$)$ $ $966,000$ $ $2,254,000$

Cost of goods sold $($$$31$ per unit$)651,0001,519,000$

Gross profit $315,000735,000$

Selling and administrative expenses $281,000309,000$

Income $ $34,000$ $ $426,000$

Additional Information

Sales and production data for these first two years follow.

Units Year $1$ Year $2$

Units produced $35,00035,000$

Units sold $21,00049,000$

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 $ $12$

Direct labor $5$

Variable overhead $5$

Fixed overhead $($$$315,000/35,000$ units$)9$

Total product cost per unit $ $31$

Selling and administrative expenses consist of the following.

Selling and Administrative Expenses Year $1$ Year $2$

Variable selling and administrative $($$$1$ per unit sold$)$ $ $21,000$ $ $49,000$

Fixed selling and administrative $260,000260,000$

Total $ $281,000$ $ $309,000$

Required:

Prepare income statements for each of these two years under variable costing.