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 $ 13

Direct labor $ 10

Variable manufacturing overhead $ 3

Variable selling and administrative $ 3

Fixed costs per year:

Fixed manufacturing overhead $ 352,000

Fixed selling and administrative $ 262,000

During the year, the company produced 32,000 units and sold 27,000 units. The selling price of the companys product is $56 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.