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 administrative $4 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.
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Lynch Company manufactures and sells a single product. The following costs were incurred during the...
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