Exercise $7-6($Algo$)$ Variable and Absorption Costing Unit Product Costs and Income Statements $[$LO$7-1,$ LO$7-2]$

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 $$13$

Direct labor $$55$

Variable manufacturing overhead $$1$

Variable selling and administrative $$1$

Fixed costs per year:

Fixed manufacturing overhead $$320,000$

Fixed selling and administrative $$230,000$

During the year, the company produced $32,000$ units and sold $17,000$ units. The selling price of the company's product is $$53$ 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 variable costing:

a$.$ Compute the unit product cost.

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