ynch Company manufactures and sells a single product. The following costs were i

Question

ynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations Variable costs per unit: 10 4. Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: $340,000 $250,000 Fixed manufacturing overhead Fixed selling and administrative ex nses the year, the company produced 34,000 units and sold 16,000 units. The selling price of the company's product is $54 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 Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Prepare an income statement for the year.A Lynch Company Variable Costing Income Statement Indirect materials

Explanation / Answer

1) Absorption costing :

Income statement :

2) Variable costing :

Contribution margin Income statement :

Direct material 10 Direct labour 4 Variable manufacturing overhead 1 Fixed manufacturing overhead (340000/34000) 10 Unit product cost 25

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