Q # 1 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:
Direct material $6
Direct labor $ 9
Variable manufacturing overhead $3
Variable Selling and administrative costs $4
Manufacturing fixed cost: $300000
Fixed selling and administrative $190000
During the year, the company produced 25000 units and sold 20000 units. The selling price of the company’s product is $50 per unit.
Required:
1. Assume company uses absorption costing.
a) Compute product cost.
b) Prepare an income statement for the year.
1. Assume company uses marginal costing:
a) Compute product cost.