1 answer

Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...

Question:

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 $ 10
        Direct labor $ 4
        Variable manufacturing overhead $ 1
        Variable selling and administrative $ 1
  Fixed costs per year:
    Fixed manufacturing overhead $ 231,000
    Fixed selling and administrative $ 141,000

    

During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the company’s product is $40 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.

            


Answers

Requirement: la Lynch Company Calculation of Unit cost Under Absorption Costing Direct Material Direct Labor Variable Manufac

Requirement: 2a Lynch Company Calculation of Unit cost Under Variable Costing Direct Material Direct Labor Variable Manufactu

.

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