7-6 Variable, Absorption Costing Unit Product Costs and Income

Required: 1. Compute the company wide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the North region. 3. Compute the break-even point in dollar sales for the South region. EXERCISE 7-6 Variable and Absorption Costing Unit Product Costs and Income Statements LO7-1, L07-2 Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per unit Manufacturing: Direct materials $6 Direct labor $9 Variable manufacturing overhead $3 Variable seling and administrative $4 Fixed costs per year: Fixed manufacturing overhead $300,000 Fixed selling and administrative $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the com- pany's product is 0 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