b. Prepare an income statement for the month using absorption costing. (Do not leave any empty spaces; input a 0 wherever it is required.) Sales Cost of goods sold: Beginning inventory Add: Cost of goods manufactured Goods available for sale Less: Ending inventory Gross margin Selling and administrative expenses Operaing income 0 0 0 $ 0 c. Reconcile the variable costing and absorption costing operating income figures. Variable costing operating income (loss) Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income (loss) $ 0 2. This part of the question is not part of your Connect assignment. 3. During the second month of operations, the company again produced 54,700 units but sold 68,800 units. (Assume no change in total fixed costs.) a. Prepare a contribution format income statement for the month using variable costing. 0 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expense Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense Operaing income 0 0 $ 0 b. Redo the company's income statement for the month using absorption costing. (Do not leave any empty spaces; input a O wherever it is required.) $ 231,420 Sales Cost of goods sold: Beginning inventory Add: Cost of goods manufactured Goods available for sale Less: Ending inventory Gross margin Selling and administrative expenses Operating income 171,332 171,332 171.332 60,088 $ 60,088 c. Reconcile the variable and absorption costing operating income (loss) figures. (Loss amounts should be entered with a minus sign.) Variable costing operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing operating income (loss) $ 0 $231,420 LEANDER OFFICE PRODUCTS INC. Income Statement Sales (40,600 units) Variable expenses: Variable cost of goods sold* Variable selling and administrative expenses Contribution margin Fixed expenses : Fixed manufacturing overhead Fixed selling and administrative expenses Operating loss $ 94,598 40,600 135, 198 96,222 103,383 13,398 116,781 $(20,559) *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: 54,700 40,600 Units produced Units sold Variable costs per unit: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative expenses $ 1.21 $ 0.90 $ 0.22 $ 1.00 Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) Unit product cost 4.22