Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customers ear. Cost data for the product follow: Variable costs per unit: Direct materials $ 12 Direct labour 17 Variable factory overhead 5 Variable selling and administrative 4 Total variable costs per unit $ 38 Fixed costs per month: Fixed manufacturing overhead $ 271,200 Fixed selling and administrative 180,800 Total fixed cost per month $ 452,000 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 Units Sold May 22,600 16,800 June 22,600 28,400 Income statements prepared by the Accounting Department using absorption costing are presented below: May June Sales $ 1,008,000 $ 1,704,000 Cost of goods sold: Beginning inventory 0 266,800 Add cost of goods manufactured 1,039,600 1,039,600 Goods available for sale 1,039,600 1,306,400 Less ending inventory 266,800 0 Cost of goods sold 772,800 1,306,400 Gross margin 235,200 397,600 Selling and administrative expenses 248,000 294,400 Operating income $ (12,800) $ 103,200

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 Total variable costs per unit Fixed costs per month Fixed Manufacturing overhead Fixed selling and administrative Total fixed cost per month 12 17 5 4 38 $271, 200 180, 800 $452, 000 The product sells for $60 per unit. Production and sales data for May and June, the first two months of operations, are as follows: May June Units Produced 22, 600 22, 600 Units Sold 16, 800 28, 400 Income statements prepared by the Accounting Department using absorption costing are presented below: May $1,008,000 June $1, 704, 000 266, 800 1,039, 600 1, 306, 400 Sales Cost of goods sold: Beginning inventory Add cost of goods Manufactured Goods available for sale Less ending inventory Cost of goods sold Gross margin Selling and administrative expenses Operating income 0 1,039, 600 1,039, 600 266, 800 772, 800 235, 200 248,000 $ (12, 800) 1, 306, 400 397, 600 294, 400 103, 200 Required: 1. Determine the unit product cost under each of the following methods a. Absorption costing b. Variable costing