Lynch Company manufactures and sells a single product. The following costs were incurred during the companysfirst year of operations:Variable costs per unit: Manufacturing: Direct materials$ 12Direct labor$ 5 Variablemanufacturing overheads 1Variable selling and administratives 1Fixed costs per year: Fixed manufacturingoverhead$ 360,000Fixed selling and administratives 270,000 During the year, the company produced 36,000 unitsand sold 18,000 units. The selling price of the companys product is $55 per unit.Required:Assume the companyuses absorption costing:Compute the unit product cost.Prepare an income statement for the year. Assume thecompany uses variable costing:Compute the unit product cost. Prepare an income statement for the year.

1. Computation of product cost per unit under the absorption costing system as follows:Computation…

Answered: Lynch Company manufactures and sells a…

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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Diego Company manufactures one product that is sold for $77 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 59,000 units and sold 54,000 units. Variable costs per unit: Manufacturing: Direct materials $ 27 Direct labor $ 10 Variable manufacturing overhead $ 2 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 1,298,000 Fixed selling and administrative expense $ 662,000 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only…

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