Audiophonics Limited manufactures and sells high quality and durable ear buds for use with personal electronics that are cust 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 7 14 9 7 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. Income statements prepared by the Accounting Department using absorption costing are presented b- May Sales June $ 951,600 $1,512,899 193,200 848,400 848,480 Cost of goods sold: Beginning inventory Add cost of goods manufactured Goods available for sale Less ending inventory Cost of goods sold 848,400 193,200 1,041,600 655,200 1,041,600 Gross margin Selling and administrative expenses 296,400 291,000 471,200 355,400 Operating income $ 5,490 $ 115,800 Required: 1. Determine the unit product cost under each of the following methods. $ 42 a. Absorption costing b. Variable costing $ 30 2. Prepare variable costing income statements for May and June using the contribution approach (Do not leav input a 0 wherever it is required.) May June 951,600 $ 1,512,800 $ 0 Sales Variable expenses Variable cost of goods sold: Beginning inventory Add: Variable production costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling and administrative Total variable avnanece 606,000 606,000 193,200 412,800 141,400 5612 193,200 606,000 799,200 0 799,200 173,600 479 ann 3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated wit sign.) Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income May June $ (26,800) $ (115,800) 55,200 0 0 55,200 $ 28,400 $ (60,600) A Not silable