Problem 8-15 Prepare and Reconcile Variable Costing Statements [LO1, LO2, LO3, LO4] Audiophonics Limited manufactures and sells high-quality and durable ear buds for use with personal electronics that are custom moulded to each customer's ear. Cost data for the product follow: ariable costs per unit $10 13 Direct materials Direct 1abour Variable factory overheaxd ariable solling and adninistrative Total variable costs per unit 12 Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative 194, 000 116, 400 Total fixed cost per month 310, 400 The product sells for $59 per unit. Production and sales data for May and June, the first two months of operations, are as follows: Units Produced 19, 400 19, 400 Units Sold 15, 200 23, 600 une Income statements prepared by the Accounting Department using absorption costing are presented below: May une Sales $ 896, 800 1, 392, 400 Cost of goods sold: Beginning inventory dd cost of goods manufactured 184, 800 853, 600 853, 600 Goods available for sale Less ending inven tory 853, 600 1, 038, 400 184, 800 668, 800 228, 000 Cost of goods sold 1, 038, 400 Gross nargin Selling and adninistrative expenses 354, 000 305, 200 238, 000 Operating inccne $ (10, 000) 48, 800 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; nput a O wherever it is required.) May June Variable expenses Variable cost of goods sold Total variable expenses Fxed expenses: Total fixed expenses Operating income (loss) 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: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing operating income