Exercise 7.6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO7L07-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: During the year, the company produced 26,000 units and sold 22,000 units. The selling price of the company's product is $46 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. \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Lynch Company } \\ \hline Bbsorption Costing Income Statement \\ \hline Bross margin & \\ \hline & \\ \hline Net operating income & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Lynch Company } \\ \hline \multicolumn{3}{|c|}{ Variable Costing Income Statement } \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & P & \\ \hline & 7 & \\ \hline & 7 & 0 \\ \hline & & 0 \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & \\ \hline & & 0 \\ \hline 7 & & $ \\ \hline \end{tabular}