Maxwell 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. . . . ....

Maxwell 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. . . . . . . . . . . . . . . . . . . . . . . . . . . $18Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7Variable manufacturing overhead . . . . . . . . . . . . . $2Variable selling and administrative . . . . . . . . . . . . . . $5Fixed costs per year:Fixed manufacturing overhead . . . . . . . . . . . . . . . . . $160,000Fixed selling and administrative expenses . . . . . . . . $110,000During the year, the company produced 20,000 units and sold 16,000 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.