Reference no: EM132537571
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 $13
Direct labor $7
Variable manufacturing overhead $1
Variable selling and administrative $1
Fixed costs per year:
Fixed manufacturing overhead $288,000
Fixed selling and administrative $198,000
During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 per unit.
Required:
Question 1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare income statement for the year.
Question 2. 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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