Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customers ear. Cost data for the product follow:

Variable costs per unit:
Direct materials	$	7
Direct labour		19
Variable factory overhead		7
Variable selling and administrative		3
Total variable costs per unit	$	36
Fixed costs per month:
Fixed manufacturing overhead	$	167,400
Fixed selling and administrative		130,200
Total fixed cost per month	$	297,600

The product sells for $54 per unit. Production and sales data for May and June, the first two months of operations, are as follows:

	Units Produced	Units Sold
May	18,600	14,800
June	18,600	22,400

Income statements prepared by the Accounting Department using absorption costing are presented below:

	May			June
Sales	$	799,200		$	1,209,600
Cost of goods sold:
Beginning inventory		0			159,600
Add cost of goods manufactured		781,200			781,200
Goods available for sale		781,200			940,800
Less ending inventory		159,600			0
Cost of goods sold		621,600			940,800
Gross margin		177,600			268,800
Selling and administrative expenses		174,600			197,400
Operating income	$	3,000		$	71,400

Required:

1. Determine the unit product cost under each of the following methods.

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.)

3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.)