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 $ 5 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 companys product is $53 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.