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$ 12Direct labor$ 5 Variable manufacturing overheads 1Variable selling and administratives 1Fixed costs per year: Fixed manufacturing overhead$ 360,000Fixed selling and administratives 270,000 During the year, the company produced 36,000 units and sold 18,000 units. The selling price of the companys product is $55 per unit.Required:Assume the company uses absorption costing:Compute the unit product cost.Prepare an income statement for the year. Assume the company uses variable costing:Compute the unit product cost. Prepare an income statement for the year.
Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:Variable costs per unit: Manufacturing: Direct materials$ 12Direct labor$ 5 Variable manufacturing overheads 1Variable selling and administratives 1Fixed costs per year: Fixed manufacturing overhead$ 360,000Fixed selling and administratives 270,000 During the year, the company produced 36,000 units and sold 18,000 units. The selling price of the companys product is $55 per unit.Required:Assume the company uses absorption costing:Compute the unit product cost.Prepare an income statement for the year. Assume the company uses variable costing:Compute the unit product cost. Prepare an income statement for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Lynch Company manufactures and sells a single product. The following costs were incurred during the companys
first year of operations:Variable costs per unit: Manufacturing: Direct materials$ 12Direct labor$ 5 Variable
manufacturing overheads 1Variable selling and administratives 1Fixed costs per year: Fixed manufacturing
overhead$ 360,000Fixed selling and administratives 270,000 During the year, the company produced 36,000 units
and sold 18,000 units. The selling price of the companys product is $55 per unit.Required:Assume the company
uses absorption costing:Compute the unit product cost.Prepare an income statement for the year. Assume the
company uses variable costing:Compute the unit product cost. Prepare an income statement for the year.
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