Exercise 6-6 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 companys first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $ 5 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 385,000 Fixed selling and administrative $ 295,000 During the year, the company produced 35,000 units and sold 17,000 units. The selling price of the companys product is $58 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.