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 $ 13 Direct labour 19 Variable factory overhead 4 Variable selling and administrative 5 Total variable costs per unit 41 Fixed costs per month: Fixed manufacturing overhead $ 222, 000 Fixed selling and administrative 199, 800 Total fixed cost per month $421, 800 The product sells for $63 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced Units Sold May 22, 200 16, 600 June 22, 200 27, 800 Income statements prepared by the Accounting Department using absorption costing are presented below: May June Sales $1, 045, 800 $1, 751, 400 Cost of goods sold: Beginning inventory 257, 600 Add cost of goods manufactured 1, 021, 200 1, 021, 200 Goods available for sale 1, 021, 200 1, 278, 800 Less ending inventory 257, 600 Cost of goods sold 763, 600 1, 278, 800 Gross margin 282, 200 472, 600 Selling and administrative expenses 282, 800 338, 800 Operating income $ (600) $ 133, 800 Required: 1. Determine the unit product cost under each of the following methods. a. Absorption costing b. Variable costing2. 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.) May June Variable expenses Variable cost of goods sold: Total variable expenses Fixed expenses Total fixed expenses Operating income (loss) 3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.) May June 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