Question: Variable and Absorption Costing Unit Product Costs and Income Statements

Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations:

During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit.

Required:

1. Assume that the company uses absorption costing:

1. Compute the unit product cost.
2. Prepare an income statement for the year.

ii. Assume that the company uses variable costing:

1. Compute the unit product cost.
2. Prepare an income statement for the year.

Price: $2.99

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