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 company?s first year of operations:

Variable costs per unit:

Manufacturing:

Direct materials$ 11

Direct labor$ 8

Variable manufacturing overhead$ 1

Variable selling and administrative$ 1

Fixed costs per year:

Fixed manufacturing overhead$ 420,000

Required: 1. Assume that the company uses absprptinn casting: a. Cpmpute the unit pro-dud east. : h. Prepare an 'nepme statement for the year. 2. Assume that the company uses variable casting: a. Cpmpute the unit pro-dud east. : b. Prepare an hepme statement for the year. Variable experlses: Pia-red expenses