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:

Required: 1. Determine the unit product cost under each of the following methods. a. Absorption costing b. Variable 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.) June May 1,053,000 $ $ 1,729,000 Sales Variable expenses: Variable cost of goods sold: Beginning inventory Add: Variable production costs Goods available sale 0 0 0 0 0 0 0 1,053,000 1,729,000 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) 235,400 214,000 449,400 603,600 $ 235,400 214,000 449,400 1,279,600 $ 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 inventory under absorption costing Deduct: Cost released from inventory under absorption costing Absorption costing operating income $ 0 $ 0