Lynch Company manufactures and sells a single product. The following costs were
ID: 2560624 • Letter: L
Question
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 Direct labor Variable manufacturing overhead Variable selling and administrative S 11 $5 $2 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $264,000 $174,000 During the year, the company produced 22,000 units and sold 18,000 units. The selling price of the company's product is $45 per unit. Required 1. Assume that the company uses absorption costing a. Compute the unit product cost. Unit product cost b. Prepare an income statement for the year Lynch Company Absorption Costing Income Statement Sales Cost of goods sold Gross margin otal selling and administrative expense et operating income 0Explanation / Answer
Step 1 (a):Computation of unit product cost assuming that the company uses absorption costing
Step 1 (b):Income statement for the year using absorption costing
Step 2 (a):Unit Product Cost using variable costing
Step 2(b): Income Statement for the year using variable costing
Sl No Particulars Amount a No of units produced 22000 b Direct Material $242000 c Direct Labour $110000 d Varaible Manufacturing Overheads $44000 e Total Variable cost $396000 f Fixed Cost per year Fixed Manufacturing Overheads $264000 g Total Cost $660000 h Unit Product Cost (g/a) $30Related Questions
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