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4. Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations: Variable costs per unit:
4. Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:
Variable costs per unit: | |
Manufacturing: | |
Direct materials | $13 |
Direct labor | $7 |
Variable manufacturing overhead | $1 |
Variable selling and administrative | $1 |
Fixed costs per year: | |
Fixed manufacturing overhead | $288,000 |
Fixed selling and administrative | $198,000 |
During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the companys product is $48 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
Unit product cost | ? |
b. Prepare an income statement for the year.
Lynch Company | |
Absorption Costing Income Statement | |
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2. Assume that the company uses variable costing:
a. Compute the unit product cost.
Unit product cost | ? |
b. Prepare an income statement for the year.
Lynch Company | ||
Variable Costing Income Statement | ||
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