Zurgot Inc. has just organized a new division to manufacture and sell specially designed computer tables, using select hardwoods. The divisions monthly costs are shown in the schedule below:

Manufacturing costs:
Variable costs per unit:
Direct materials	$	161
Variable manufacturing overhead	$	10
Fixed manufacturing overhead costs (total)	$	454,230
Selling and administrative costs:
Variable		10	% of sales
Fixed (total)	$	315,180

Zurgot regards all of its workers as full-time employees, and the company has a long-standing no-layoff policy. Furthermore, production is highly automated. Accordingly, the company includes its labour costs in its fixed manufacturing overhead. The tables sell for $430 each.

During the first month of operations, the following activity was recorded:

Units produced		4,635
Units sold		3,790

Required:

1.	Compute the unit product cost under each of the following costing method.
	absorption costing Variable costing

2.	Prepare an income statement for the month using absorption costing.

3.	Prepare a contribution format income statement for the month using variable costing.

5.	Reconcile the absorption costing and variable costing operating income figures in (2) and (3) above.