The following costs were incurred for the single product produced during the first year of operations for the Fairfax Manufacturing Company:

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	$ 350,000
Fixed selling and administrative	$ 260,000

During the year, the company produced 35,000 units and sold 25,000 units. The selling price of the companys product is $46 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.