Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 5 Direct labor 10 Variable manufacturing overhead 2 Variable selling and administrative 1 Total variable cost per unit $ 18 Fixed costs per month: Fixed manufacturing overhead $ 72,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 241,000 The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 24,000 20,000 August 24,000 28,000 The companys Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 960,000 $ 1,344,000 Cost of goods sold 400,000 560,000 Gross margin 560,000 784,000 Selling and administrative expenses 189,000 197,000 Net operating income $ 371,000 $ 587,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.

Denton Company Variable Costing Income Statement July August Sales $ 960,000 $ 1,344,000 Variable expenses: Variable cost of goods sold Variable selling and administrative expenses 0 960,000 0 1,344,000 Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expenses 72,000 169,000 72,000 169,000 Total fixed expenses Net operating income (loss) 241,000 241,000 719,000 $1,103,000 $ Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a negative value.) August Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes July 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)