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 manufacturing overhead Fixed costs per month: 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: Sales June May $1,036,000 $1,480,000 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 Required: 918,000 162,000 918,000 918,000 1,080,000 162,000 756,000 1,080,000 280,000 400,000 285,000 327,000 $ (5,000) S 73,000 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. (Do not leave any empty spaces; input a O wherever it is required.) Sales Variable expenses: Variable cost of goods sold Total variable expenses Fixed expenses Total fixed expenses Operating income (loss) May June 4. 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