Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first

Question:

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 25,000 units and 20,000 sold 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 theyear.

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Managerial Accounting

ISBN: 9780072834949

11th Edition

Authors: Ray Garrison, Eric Noreen, Peter Brewer

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Question Posted: Jun 28, 2011 04:49 AM

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Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first

Question:

Variable costs per unit: Manufacturing: $6 Direct materials $9 Direct labor Variable manufacturing overhead $3 $4 Variable selling and administrative Fixed costs per year: $300,000 Fixed manufacturing overhead $190,000 Fixed selling and administrative

Step by Step Answer:

1 a The unit product cost under absorption costing would be Direct materials 6 Direct labor 9 Variab...View the full answer

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