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 $ 14

Direct labor $ 3

Variable manufacturing overhead $ 1

Variable selling and administrative $ 1

Fixed costs per year: Fixed manufacturing overhead $ 290,000 Fixed selling and administrative $ 200,000 During the year, the company produced 29,000 units and sold 22,000 units. The selling price of the companys product is $42 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.