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 $10 Direct labor $4 Variable manufacturing $2 overhead Variable selling and $2 administrative Fixed costs per year: Fixed manufacturing $ overhead 374,000 $ Fixed selling and 284,000 administrative b. Prepare an income statement for the year. Lynch Company Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold Contribution margin Fixed expenses: Fixed manufacturing overhead 374,000 Fixed selling and administrative expense 284,000 Net operating income $ 1,144,000 0 1,144,000 658,000 $ 486,000 During the year, the company produced 34,000 units and sold 26,000 units. The selling price of the company's product is $44 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. Unit product cost $ 27 b. Prepare an income statement for the year. Lynch Company Absorption Costing Income Statement Sales $1,144,000 Cost of goods sold 702,000 Gross margin 442,000 Total selling and administrative expense 336,000 Net operating income $ 106,000 2. Assume that the company uses variable costing: a. Compute the unit product cost. Unit product cost 16 b. Prepare an income statement for the year.