Problem 19-1A Variable costing income statement and conversion to absorption costing income (two consecutive years) LO P2, P3 [The following information applies to the questions displayed below. Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Sales ($46 per unit) Cost of goods sold ($31 per unit) Gross margin Selling and administrative expenses Net income 2016 2017 $920,000 $1,840,000 620,000 1,240,000 300,000 600,000 280,000 315,000 $ 20,000 $ 285,000 Additional Information a. Sales and production data for these first two years follow. Units produced Units sold 2016 30,000 20,000 2017 30,000 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 $ 6 Problem 19-1A Part 1 1. Complete income statements for the company for each of entered with a minus sign.) first two years under variable costing. (Loss amounts should be DOWELL Company Variable Costing Income Statements 2016 2017 Sales $ 920,000 $ 1,840,000 Less: Variable costs Direct materials Direct labor Variable overhead Variable selling and administrative expenses Contribution margin Less: Fixed expenses Fixed overhead Fixed selling and administrative costs Net income (loss) Problem 19-1A Part 2 2. What are the differences between the absorption costing income and the variable costing income for these two years? (Loss amounts should be entered with a minus sign.) DOWELL COMPANY Reconciliation of Variable Costing Income to Absorption Costing Income 2016 2017 Variable costing income (loss) Absorption costing income (loss)