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 Total variable costs per unit Fixed costs per month: $135,000 Fixed manufacturing overhead Fixed selling and administrative 172,000 $307,000 Total fixed cost per month The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, are as follows: Units Units Produced Sold July 27.000 August 27,000 23,000 31,000 The company's Accounting Department has prepared absorption costing income statements for July and August as presented below: August Sales $1,058,000 $1,426,000 775,000 Cost of goods sold 575,000 Gross margin 483,000 651,000 241,000 265,000 Selling and administrative expenses Net operating income 242,000 386,000