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		$ 11
Direct labor		$ 5
Variable manufacturing overhead		$ 2
Variable selling and administrative		$ 2
Fixed costs per year:
Fixed manufacturing overhead	$ 264,000
Fixed selling and administrative	$ 174,000

During the year, the company produced 22,000 units and sold 18,000 units. The selling price of the companys product is $45 per unit.

Required:

1.	Assume that the company uses absorption costing

a.	Compute the unit product cost.
	Unit product cost: ?

b.

Prepare an income statement for the year.

Lynch company

Absorbtion costing income statment

?	?
?	?
?
?	?
?

2.	Assume that the company uses variable costing:

a.	Compute the unit product cost.

Unit product cost: ?

b.

Prepare an income statement for the year.

?		?
Variable Expense:
?	?
?	?
?	?
?	?
?
Fixed Expenses:
?	?
?	?
?	?
?	?
?

* Answer and fill in the ?