Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

DMG 5018 - TUTORIAL 6 Exercise 3 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 ........................................................ Direct labor .............................................................. Variable manufacturing overhead ................................. Variable selling and administrative ................................ $6 $9 $3 $4 Fixed costs per year : Fixed manufacturing overhead ..................................... Fixed selling and administrative ................................... $300,000 $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses the absorption costing method: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses the variable costing method: a. Compute the unit product cost. b. Prepare an income statement for the year. NAR 1