Denton Company manufactures and sells a single product. Cost data for the product are given:

Variable costs per unit:
Direct materials			$	5
Direct labor				11
Variable manufacturing overhead				3
Variable selling and administrative				2
Total variable cost per unit			$	21
Fixed costs per month:
Fixed manufacturing overhead	$	45,000
Fixed selling and administrative		172,000
Total fixed cost per month	$	217,000

The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	15,000	11,000
August	15,000	19,000

The companys Accounting Department has prepared the following absorption costing income statements for July and August:

	July			August
Sales	$	550,000		$	950,000
Cost of goods sold		242,000			418,000
Gross margin		308,000			532,000
Selling and administrative expenses		194,000			210,000
Net operating income	$	114,000		$	322,000

Prepare variable costing income statements for July and August.

Denton Company
Variable Costing Income Statement
	July	August
Sales	$550,000	$950,000
Variable expenses:
Variable cost of goods sold
Variable selling and administrative expenses
Total variable expenses	0	0
Contribution margin	550,000	950,000
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative expenses
Total fixed expenses	0	0
Net operating income (loss)	$550,000	$950,000

Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a negative value.)

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
	July	August
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)