Leander Office Products Inc. produces and sells small storage and organizational products for office use. During the first month of operations, the products sold well. Andrea Leander, the owner of the company, was surprised to see a loss for the month on her income statement. This statement was prepared by a local bookkeeping service recommended to her by her bank manager. The statement follows:

LEANDER OFFICE PRODUCTS INC.
Income Statement
Sales (58,400 units)				$	350,400
Variable expenses:
Variable cost of goods sold*	$	167,608
Variable selling and administrative expenses		54,312			221,920
Contribution margin					128,480
Fixed expenses:
Fixed manufacturing overhead		110,284
Fixed selling and administrative expenses		28,032			138,316
Operating loss				$	(9,836	)

*Consists of direct materials, direct labour, and variable manufacturing overhead.

Leander is discouraged over the loss shown for the month, particularly since she had planned to use the statement to encourage investors to purchase shares in the new company. A friend who is an accountant insists that the company should be using absorption costing rather than variable costing. He argues that if absorption costing had been used, the company would probably have reported a profit for the month.

Selected cost data relating to the product and to the first month of operations follow:

Units produced		69,800
Units sold		58,400
Variable costs per unit:
Direct materials	$	1.50
Direct labour	$	1.08
Variable manufacturing overhead	$	0.29
Variable selling and administrative expenses	$	0.93

Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) b. Redo the company's income statement for the month using absorption costing. (Do not leave any empty spaces; Input a 0 wherever it is required.) c. Reconclle the varlable and absorption costing operating income (loss) figures. (Loss amounts should be entered with a minus slgn.) 3. During the second month of operations, the company again produced 69,800 units but sold 81,200 units. (Assume no change in total fixed costs.) a. Prepare a contribution format income statement for the month using varlable costing. b. Prepare an Income statement for the month using absorption costing. (Do not leave any empty spaces; Input a 0 wherever It is required.) c. Reconcile the varlable costing and absorption costing operating income figures