Question
Exercise 6-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Lynch Company manufactures and sells a single product. The following
Exercise 6-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]
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 | $ 10 |
Direct labor | $ 4 |
Variable manufacturing overhead | $ 1 |
Variable selling and administrative | $ 1 |
Fixed costs per year: | |
Fixed manufacturing overhead | $ 340,000 |
Fixed selling and administrative | $ 250,000 |
During the year, the company produced 34,000 units and sold 16,000 units. The selling price of the companys product is $54 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
Exercise 6-6 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements (LO6-1, LO6-2] 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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 10 $ 4 $ 1 $ 1 $ 340,000 $ 250,000 During the year, the company produced 34,000 units and sold 16,000 units. The selling price of the company's product is $54 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year
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