Exercise $6-6($Algo$)$ Variable and Absorption Costing Unit Product Costs and Income Statements $[$LO$6-1,$ L$06-2]$

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

Direct labor

Variable manufacturing overhead

Variable selling and administrative

Fixed costs per year:

Fixed manufacturing overhead

Fixed selling and administrative

$$352,000$

$$262,000$

During the year, the company produced $32,000$ units and sold $27,000$ units. The selling price of the company's product is $$56$ per unit.

Required:

Assume that the company uses absorption costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

Assume that the company uses variable costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

Complete this question by entering your answers in the tabs below.

Req $1B$

Compute the unit product cost. Assume that the company uses absorption costing.

Unit product cost