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$11

Direct labor$3

Variable manufacturing overhead$1

Variable selling and administrative$1

Fixed costs per year:

Fixed manufacturing overhead$330,000

Fixed selling and administrative$240,000

During the year, the company produced 30,000 units and sold 23,000 units. The selling price of the company's product is $43 per unit.

Required:

1. Assume that the company uses absorption costing:

a. Compute the unit product cost.

b. Prepare income statement for the year.

2. Assume that the company uses variable costing:

a. Compute the unit product cost.

b. Prepare income statement for the year