Cost Accounting: Lynch Company manufactures and sells a single product. The following costs were

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:
Assume the company uses absorption costing:
Compute the unit product cost.
Prepare an income statement for the year.
Assume the company uses variable costing:
Compute the unit product cost.
Prepare an income statement for the year.

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