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: $ 13 19 4 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 $ 41 $222,000 199,800 $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: May June Units Produced 22,200 22,200 Units Sold 16,600 27,800 Income statements prepared by the Accounting Department using absorption costing are presented below: May June $1,045,800 $1,751,400 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 0 257,600 1,021,200 1,021,200 1,021,200 1, 278,800 257,600 763,600 1,278,890 282,200 472,600 282,800 338,800 (600) $ 133, 800 Required: 1. Determine the unit product cost under each of the following methods. $ 36 a. Absorption costing b. Variable costing $ 26 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 1,045,800 June 1,751,400 $ $ 0 257,600 572,000 572,000 572,000 829,600 572,000 829,600 Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable production costs Goods available for sale Less: Ending inventory Variable cost of goods sold Variable selling and administrative Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Operating income (loss) 572,000 473,800 829,600 921,800 F................. 0 0 $ 473,800 $ 921,800 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 $ $ 0