EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statemen LO6-1, L06-2 Lynch Company manufactures and sells a single product. The following costs were incurra 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 Slidlive ..., $300,000 $190,000 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: 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 6-7