15 21 7 Variable costs per unit Direct materials Direct labour Variable factory overbend Variable selling and administrative Total variable costs per unit Fixed costs per month Fixed manufacturing overhead Fixed selling and administrative Total fixed cont per month 51 $170,000 187,000 $357,000 The product sells for $74 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Unita Produced 17,000 17.000 May June Units Sold 14,000 20,000 Income statements prepared by the Accounting Department using absorption costing are presented below: May June $2,036,000 $1,400,000 0 918,000 162,000 918,000 Salen Coat of goods soldi Beginning inventory Add cont of goods manufactured Goods available for sale Less ending inventory Cost of goods sold 918,000 162,000 1,080.000 0 756,000 1,080,000 Gross margin Selling and administrative expenses 280,000 285,000 400,000 327,000 Operating income $ (5,000)) 73,000 Required: 1. Determine the unit product cost under each of the following methods $ 54 a. Absorption costing b. Variable costing $ 44 2. Prepare variable costing income statements for May and June using the contribution approach. (Do not leave any empty spaces; Input a O wherever it is required.) May June $ 1,036,000 $ 1.480,000 0 0 0 0 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 Vanable selling and administrative Total variable expenses Contribution margin Fixed expenses Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Operating income (loss) 0 0 1,036,000 1,480,000 0 0 $ 1,036,000 $ 1,480,000 3. Reconcile the variable costing and absorption costing operating income figures (loss amounts should be indicated with a minus sign.) May Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Foed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income