3. Reconcile the variable costing and absorption costing net operating income (loss) figures.

Problem 5-22 Prepare and Reconcile Variable Costing Statements [LO5-1, LO5-2, LO5-3] Denton Company manufactures and sells a single product. Cost data for the product are given below Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 4 2 Total variable cost per unit Fixed costs per month Fixed manufacturing overhead Fixed sellg and administrative $ 60,000 163,000 Total fixed cost per month The product sells for $51 per unit. Production and sales data for July and August, the first two months of operations, are as follows Units Units Sold 11,000 19,000 Produced July August 15,000 15,000 The company's Accounting Department has prepared absorption costing income statements for July and August as presented below July Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income August $561,000 $969,000 264,000 490,00 $297,000 $513,000 160.00201,000 $112,000 312,000 185,000 3. Reconcile the variable costing and absorption costing net operating income (loss) figures. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes July August 96,000$ Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing Absorption costing net operating income (loss) 328,000 328,000