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$7Direct labour17Variable factory overhead9Variable selling and administrative4Total variable costs per unit$37Fixed costs per month:Fixed manufacturing overhead$247,000Fixed selling and administrative133,000Total fixed cost per month$380,000

The product sells for $58 per unit. Production and sales data for May and June, the first two months of operations, are as follows:

Units ProducedUnits SoldMay19,00015,000June19,00023,000

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

MayJuneSales$870,000$1,334,000Cost of goods sold:Beginning inventory0184,000Add cost of goods manufactured874,000874,000Goods available for sale874,0001,058,000Less ending inventory184,0000Cost of goods sold690,0001,058,000Gross margin180,000276,000Selling and administrative expenses193,000225,000Operating income$(13,000)$51,000

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.)

4.Not available in Connect.

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