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 Total variable costs per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month 15 22 21 8 7 51 $170,000 187,000 $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: May June Units Produced 17,000 17,000 Units Sold 14,000 20,000 Income statements prepared by the Accounting Department using absorption costing are presented below: The product sells for $74 per unit. Production and sales data for May and June, the first two months of operations, are as follows: May June Units Produced 17,000 17,000 Units Sold 14,000 20,000 Income statements prepared by the Accounting Department using absorption costing are presented below: Sales Cost of goods sold: Beginning inventory Add cost of goods manufactured Goods available for sale Less ending inventory Cost of goods sold Gross margin Selling and administrative expenses Operating income May June $1,036,000 $1,480,000 162,000 918,000 918,000 918,000 1,080,000 162,000 756,000 1,080,000 280,000 400,000 285,000 327,000 $ (5,000) $ 73,000 Required: 1. Determine the unit product cost under each of the following methods. a Absorption costing $ 54 b. Variable costing S 44 2. Prepare variable costing Income statements for May and June using the contribution approach. (Do not leave any empty spaces; input a O wherever it is required.) Sales Variable expenses: Variable cost of goods sold Beginning inventory May June Add: Variable production costs Goods available for sale 0 0 Add: Ending inventory Cost of goods manufactured 0 0 Variable selling and administrative Total variable expenses 0 0 Contribution margin 0 0 Foxed expenses Fixed manufacturing overhead Foxed selling and administrative Total fixed expenses Operating income (loss) 170,000 170,000 187,000 187,000 357,000 357.000 $ (357,000) $ (357,000) 3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.) Variable costing operating income (loss) Add: Cost deferred in inventory under absorption costing Deduct Cost released from inventory under absorption costing Absorption costing operating income May June $ 0 $