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: The product sells for $74 per Init. Production and sales data for May and June, the first
two months of operations, are as follows:
Income statements prepared by the Accounting Department using absorption costing are
presented be Required: 1. Determine the unit product fost under each of the following methods.
2. Prepare variable costing income statements for May and June using the contribution approach.
(Do not leave any empty spaces; input a 0 wherever it is required.)
3. Reconcile the variable costing and absorption costing operating income figures. (Loss amounts
should be indicated with a minus sign.)