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 company's first year of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $11 $5 $2 $2 Fixed manufacturing overhead Fixed selling and administrative During the year, the company produced 22,000 units and sold 18,000 units. The selling price of the company's product is $45 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. $ 264,000 $ 174,000

Exercise 7-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, [072] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: During the yeat, the company produced 22,000 units and sold 18,000 units, The selling price of the company's product is $45 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 thot the company uses variable costing: a Compite the unit product coit b. Prepare an income statement for the year