Exercise 7-6 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1, LO7 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 $6 Direct labor $9 Variable manufacturing overhead $3 Variable selling and $4 administrative Fixed costs per year: Fixed manufacturing overhead $300,000 Fixed selling and administrative $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 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