Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:

During the year, the company produced 27,000 units and sold 23,000 units. The selling price of the companys product is $42 per unit.

Required:

1. Assume the company uses absorption costing:
   1. Compute the unit product cost.
   2. Prepare an income statement for the year.
2. Assume the company uses variable costing:
   1. Compute the unit product cost.
   2. Prepare an income statement for the year.

Variable costs per unit: Manufacturing: Direct materials $12 Direct labor $3 Variable manufacturing overhead $1 Variable selling and administrative $1 Fixed costs per year: Fixed manufacturing overhead $324,000 Fixed selling and administrative $234,000