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 $13

Direct labor $7

Variable manufacturing overhead $1

Variable selling and administrative $1

Fixed costs per year:

Fixed manufacturing overhead $288,000

Fixed selling and administrative $198,000

During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 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 an income statement for the year.