Exercise $7-6($Algo$)$ Variable, and Absorption Costing Unit Product Costs and Income Statements $[$LO$7-1,[07-2]$

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

$$11$

$$3$

$$1$

Fixed costs per year:

Fixed manufacturing overhead

Fixed selling and administrative

$$330,000$

$$240,000$

During the year, the company produced $30,000$ units and sold $23,000$ units. The selling price of the company's product is $$43$ 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.

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