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.