Question: EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements LO6-1, L06-2 Lynch Company manufactures and sells a single product. The following costs

EXERCISE 6-6 Variable and Absorption Costing Unit

EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements LO6-1, L06-2 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 Variable selling 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 company's product is $50 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. 4 b. Prepare an income statement for the year. $3

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