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 $12

Direct labor $6

Variable manufacturing overhead $1

Variable selling and administrative $1

Fixed costs per year: ?

Fixed manufacturing overhead $308,000

Fixed selling and administrative $218,000

During the year, the company produced 28,000 units and sold 15,000 units. The selling price of the companys product is $56 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.