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 10 19 Total variable costs per unit $ 39 Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative $126,400 173,800 Total fixed cost per month $300,200 The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced 15,800 15,800 May June Units Sold 13,400 18,200 Income statements prepared by the Accounting Department using absorption costing are presented below: Sales May June $ 804,000 $1,092,000 Cost of goods sold: Beginning inventory Add cost of goods manufactured 0 663,600 100,800 663,600 Goods available for sale Less ending inventory 663,600 100,800 764,400 0 Cost of goods sold 562,800 764,400 Gross margin Selling and administrative expenses 241,200 240,800 327,600 264,800 Operating income $ 400 $ 62,800 Required: 1. Determine the unit product cost under each of the following methods. a. Absorption costing b. Variable costing 3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.) May June 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 0 $ 0