Exercise 7-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, L07-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: Variable costs per uniti Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per years Fixed manufacturing overhead Fixed selling and administrative $ 12 $5 $ 1 $1 $360,000 $270,000 During the year, the company produced 36,000 units and sold 18,000 units. The selling price of the company's product is $55 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.