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Compute the unit product cost

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Reference no: EM132991262

Question - 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 $12

Direct labor $4

Variable manufacturing overhead $2

Variable selling and administrative $2

Fixed costs per year: Fixed manufacturing overhead $370,000

Fixed selling and administrative $200,000

During the year, the company produced 37,000 units and sold 18,000 units. The selling price of the company's product is $55 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.

Reference no: EM132991262

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