Question

Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: 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.
(b) Assume that the company uses variable costing: i. Compute the unit product cost. ii. Prepare an income statement for the year.

Answer 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:                        

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.

The four steps of writing an income declaration are: to identify sources of sales, in addition to profits from investments, for an instance pick out business enterprise prices and losses incurred over the same period. Consolidate sales, charges, profits, and losses by means of category, payee, or some other factor.

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