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

Direct labor $ $15$

Variable manufacturing overhead $$5$

Variable selling and administrative $$1$

Fixed costs per year:

$$1$

Fixed manufacturing overhead

Fixed selling and administrative

$ $286,000$

$$196,000$

During the year, the company produced $26,000$ units and sold $22,000$ units. The selling price of the company's product is $$46$ per unit.

Required:

Assume that the company uses absorption costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

Assume that the company uses variable costing:

a$.$ Compute the unit product cost.

b$.$ Prepare an income statement for the year.

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Ren $1$R

RenJA

Ren$2B$