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 $ 217 Variable selling and 6 administrative Total variable costs per unit $ 42 Fixed costs per month Fixed manufacturing overhead $235,400 Fixed selling and administrative Total fixed cost per month 214,000 $449,400 The product sells for $65 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Units Produced Sold May 21,400 16.200 June 21.400 26.600 Income statements prepared by the Accounting Department using absorption costing are presented below. Sales Cost of goods sold Beginning inventory Add cast of goods manufactured May $1,053,000 June $1,729,000 0 244.400 1,005,800 1.005.800 Sales Cost of goods sold: Beginning inventory May $1,053,000 June $1,729,000 0 244,400 Add cost of goods 1,005,800 1.005,800 manufactured Goods available for sale 1,005,800 1,250,200 Less ending inventory 244,400 Cost of goods sold 761,400 1,250,200 Gross margin Selling and administrative expenses 291,600 478,800 311,200 373,600 Operating income $ (19,600)) $ 105,200 Required: 1. Determine the unit product cost under each of the following methods. Absorption costing Variable costing 2. Prepare variable costing income statements for May and June using the contribution approach Sales Variable expenses Variable cost of goods sold Beginning inventory Add: Variable production costs Goods available for sale 0 0 Less: Ending inventory Variable cost of goods sold O Variable cost of goods sold Total variable expenses ol Contribution margin 0 0 Fixed expenses Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses 0 0 Operating income (loss) $ 0 $ 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) May June Add: Fixed manufacturing overhead cost deferred in invertory under absorption costing Deduct Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income $ 0 $