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 10 19 5 5 Total variable costs per unit $ 39 Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $126,400 173, 800 $300,200 The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced 15,800 15,800 May June Units Sold 13,400 18,200 Income statements prepared by the Accounting Department using absorption costing are presented below: Sales May June $ 804,000 $1,092,000 Cost of goods sold: Beginning inventory Add cost of goods manufactured 0 663,600 100,800 663,600 Goods available for sale Less ending inventory 663,600 100,800 764,400 0 Cost of goods sold 562,800 764,400 Gross margin Selling and administrative expenses 241,200 240, 800 327,600 264,800 Operating income $ 400 $ 62,800 Required: 1. Determine the unit product cost under each of the following methods. Answer is complete and correct. a. $ 42 Absorption costing Variable costing b. $ 34 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.) Answer is not complete. May June Sales Variable expenses: Variable cost of goods sold: 0 0 0 0 0 0 0 0 Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Operating income (loss) 0 0 $ 0 $ 0 3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts should be indicated with a minus sign.) Answer is not complete. May June Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income 0 $ 0