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

$[06-2]$

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 $$10$

Direct labor $$4$

Variable manufacturing overhead $$2$

Variable selling and administrative $$2$

Fixed costs per year:

Fixed manufacturing overhead $$374,000$

Fixed selling and administrative $$284,0$

During the year, the company produced $34,000$ units and sold $26,000$ unlts. The selling price of the company's product is $$44$ per unit.

Required:

Assume that the company uses absorption costing:

a$.$ Compute the unit product cost.

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

Assume that the company uses varlable costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an Income statement for the year. ANSWER ALL PARTS THANK YOU