ch 6 exer 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		$ 10
Variable manufacturing overhead		$ 3
Variable selling and administrative		$ 3
Fixed costs per year:
Fixed manufacturing overhead	$ 352,000
Fixed selling and administrative	$ 262,000

During the year, the company produced 32,000 units and sold 27,000 units. The selling price of the companys product is $56 per unit.

Required:

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
	0
	$0

Assume that the company uses variable costing:

c

Compute the unit product cost.

Unit product cost

d.

Prepare an income statement for the year.

Lynch Company
Variable Costing Income Statement
Variable expenses:
		0
		0
Fixed expenses:
		0
		$0