3. Reconcile the variable costing and absorption costing operating income figures.

Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data for the product follow: Variable costs per unit: Direct materials Direct labour Variable factory overhead Variable selling and administrative Total variable costs per unit 37 Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $242,400 181,800 Total fixed cost per month $424,200 The product sells for $61 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced 20, 200 20,200 May June Units Sold 15,600 24,800 Income statements prepared by the Accounting Department using absorption costing are presented below: May $ 951,600 June $1,512,800 Sales Cost of goods sold: Beginning inventory Add cost of goods manufactured 0 848,400 193,200 848,400 1,041,600 Goods available for sale Less ending inventory 848,400 193,200 Cost of goods sold 655,200 1,041,600 Gross margin Selling and administrative expenses 296,400 291,000 471,200 355,400 Operating income $ 5,400 $ 115,800 Required: 1. Determine the unit product cost under each of the following methods. 6. variable contesting a. Absorption costing b. Variable costing 2. Prepare variable costing income statements for May and June using the contribution approach. (Do not leave any empty spaces; input a 0 wherever it is required.)