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$12Direct labor$4Variable manufacturing overhead$2Variable selling and administrative$2Fixed costs per year:Fixed manufacturing overhead$370,000Fixed selling and administrative$200,000

During the year, the company produced 37,000 units and sold 18,000 units. The selling price of the company's product is $55 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.