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EXERCISE 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements [L01, LO2] 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 $6 Direct labor $9 Variable manufacturing overhead $3 Variable selling and administrative $4 Fixed costs per year: Fixed manufacturing overhead $300,000 Fixed selling and administrative $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.

          EXERCISE 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements
[L01, LO2]
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
$6
Direct labor
$9
Variable manufacturing overhead
$3
Variable selling and administrative
$4
Fixed costs per year:
Fixed manufacturing overhead
$300,000
Fixed selling and administrative
$190,000
During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the
company's product is $50 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.

EXERCISE 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements
[L01, LO2]
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
6
Direct labor9
Variable manufacturing overhead
3
Variable selling and administrative4
Fixed costs per year:
Fixed manufacturing overhead
300,000
Fixed selling and administrative190,000
During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the
company's product is 50 per unit.
Required:
1. Assume that the company uses absorption costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year.

Added by Henry J.

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