Question
Please help me solve all 6 parts. Exercise 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Lynch Company manufactures and
Please help me solve all 6 parts.
Exercise 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]
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 | $ 6 | |
Direct labor | $ 9 | |
Variable manufacturing overhead | $ 3 | |
Variable selling and administrative | $ 4 | |
Fixed costs per year: | ||
Fixed manufacturing overhead | $ 300,000 | |
Fixed selling and administrative | $ 190,000 | |
During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the companys product is $50 per unit. |
Required: |
1. Assume that the company uses absorption costing:
2. Compute the unit product cost.
3. Prepare an income statement for the year.
4. Assume that the company uses variable costing:
5. Compute the unit product cost.
6. Prepare an income statement for the year.
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