Exercise 7-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7-2] 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 $ 11 Direct labor $ 8 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 420,000 Fixed selling and administrative $ 330,000 During the year, the company produced 30,000 units and sold 25,000 units. The selling price of the companys product is $54 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. NOTE: You will have a BLANK LINE prior to your cost totals on the variable costing income statement to format correctly in the Connect system.