Exercise 7-6 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: 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. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req 2A Req 2B Prepare an income statement for the year. Assume that the company uses variable costing. Lynch Company Variable Costing Income Statement Sales $ 1,000,000 Variable expenses Variable cost of goods sold $ 380,000 Variable selling expense 80,000 440,000 560,000 Contribution margin Fixed expenses Fored manufacturing overhead Fixed selling and administrative expense Net operating income $ 580,000