EXERCISE $6-6$ Variable and Absorption Costing Unit Product Costs and Income Statements LO$6-1,$ LO$6-2$

Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

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:

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.