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 12 17 7 6 Total variable costs per unit $ 42 Fixed costs per month: Fixed manufacturing overhead $235,400 Fixed selling and administrative 214,000 Total fixed cost per month $ 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 Produced 21,400 21,400 May June Units Sold 16,200 26,600 Income statements prepared by the Accounting Department using absorption costing are presented below: Sales May June $1,053,000 $1,729,000 Cost of goods sold: Beginning inventory Add cost of goods manufactured 0 244,400 1,005,800 1,005,800 Goods available for sale Less ending inventory 1,005,800 1,250,200 244,400 0 Cost of goods sold 761,400 1,250,200 Gross margin Selling and administrative expenses 291,600 311,200 478, 800 373,600 Operating income $ (19,600)) $ 105,200 Required: 1. Determine the unit product cost under each of the following methods. Absorption a costing Variable b. costing 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.) 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: 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