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: $ 12 18 Variable costs per unit: Direct materials Direct labour Variable factory overhead Variable selling and administrative o Total variable costs per unit $ 44 Fixed costs per month: Fixed manufacturing overhead $ 145,600 Fixed selling and administrative 127,400 Total fixed cost per month $273,000 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 Units Produced Sold 18,200 14,600 18,200 21,800 May June Income statements prepared by the Accounting Department using absorption costing are presented below: May $ 876.000 June $1,308,000 Sales 0 169,200 Cost of goods sold: Beginning inventory Add cost of goods manufactured 855,400 855,400 Goods available for sale Less ending inventory 855,400 169,200 1,024,600 0 Cost of goods sold 686,200 1,024,600 189,800 Gross margin Selling and administrative expenses 283,400 236,400 200,400 Operating income $ (10,600)) $ 47,000 Required: 1. Determine the unit product cost under each of the following methods. a. Absorption costing b. Variable costing 2. Prepare variable costing income statements for May and June using the contribution approach. May June Variable expenses Variable cost of goods sold: Total variable expenses Fixed expenses Total fixed expenses Operating income (loss) 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