3.

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
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative

$ 10
$4
$1
$1
$ 340,000
$ 250,000

During the year, the company produced 34,000 units and sold 16,000 units. The selling price of the companys product is $54 per unit.
Required:
1. Assume that the company uses absorption costing:

2.

a.

Compute the unit product cost.

b.

Prepare an income statement for the year.

Assume that the company uses variable costing:

a.

Compute the unit product cost.

b.

Prepare an income statement for the year.