Exercise $6-6($Algo$)$ Variable and Absorption Costing Unit Product Costs and Income Statements $[$LO$6-1,$ L$06-2]$

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 $$12$

Direct labor $$3$

Variable manufacturing overhead $$1$

Variable selling and administrative $$1$

Fixed costs per year:

Fixed manufacturing overhead $$324,000$

Fixed selling and administrative $$234,000$

During the year, the company produced $27,000$ units and sold $23,000$ units. The selling price of the company's product is $$42$ per unit.

Required:

Assume the company uses absorption costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

Assume the company uses variable costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

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