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	$	15
Direct labour		21
Variable factory overhead		8
Variable selling and administrative		7
Total variable costs per unit	$	51
Fixed costs per month:
Fixed manufacturing overhead	$	170,000
Fixed selling and administrative		187,000
Total fixed cost per month	$	357,000

The product sells for $74 per unit. Production and sales data for May and June, the first two months of operations, are as follows:

	Units Produced	Units Sold
May	17,000	14,000
June	17,000	20,000

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

	May			June
Sales	$	1,036,000		$	1,480,000
Cost of goods sold:
Beginning inventory		0			162,000
Add cost of goods manufactured		918,000			918,000
Goods available for sale		918,000			1,080,000
Less ending inventory		162,000			0
Cost of goods sold		756,000			1,080,000
Gross margin		280,000			400,000
Selling and administrative expenses		285,000			327,000
Operating income	$	(5,000)	)	$	73,000

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.)