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es 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 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 13 $ 7 $ 1 $1 $ 288,000 $ 198,000 During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 per unit. Required: 1. Assume the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.

es 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 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 13 $ 7 $ 1 $1 $ 288,000 $ 198,000 During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 per unit. Required: 1. Assume the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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es 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 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 13 $ 7 $ 1 $1 $ 288,000 $ 198,000 During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 per unit. Required: 1. Assume the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
Transcribed Image Text:es 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 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative $ 13 $ 7 $ 1 $1 $ 288,000 $ 198,000 During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company's product is $48 per unit. Required: 1. Assume the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
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