5. (8 points) Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7 10 5 3 $25 Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead $315,000 Fixed selling and administrative 245,000 Total fixed cost per month $560,000 The product sells for $60 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units sold July 17,500 August 17,500 15,000 20,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $900,000 $1,200,000 Cost of goods sold 600,000 800,000 Gross margin 300,000 400,000 Selling and administrative expenses 290,000 305,000 Net operating income $10,000 $ 95,000 a. (2 points) Determine the unit product cost under: Absorption costing. Variable costing. b. (3 points) Prepare variable costing income statements for July and August. c. (3 points) Reconcile the variable costing and absorption costing net operating incomes for July and August. 6