50 1 points Exercise 6-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per uniti Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 10 $4 $ 1 $1 $ 231,000 $141,000 During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the company's product is $40 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year. Req 1A Req 1B Req 2A Req 2B Prepare an income statement for the year. Assume that the company uses absorption costing. Lynch Company Absorption Costing Income Statement Sales $680,000 Cost of goods sold 546,000 Gross margin 134,000 Selling and administrative expense 141,000 Net operating income $ (7,000) < Req 1A Req 2A > 50 points 1 Prepare an income statement for the year. Assume that the company uses variable costing Lynch Company Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expense Fixed expenses: $ 680,000 $315,000 21,000 336,000 344,000 Fixed manufacturing overhead 231,000 Fixed selling and administrative 141,000 Net operating income 372,000 $ (28,000)