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

Variable costs per unit: Direct materials$ 6Direct labor11Variable manufacturing overhead3Variable selling and administrative2Total variable cost per unit$ 22Fixed costs per month: Fixed manufacturing overhead$ 81,000Fixed selling and administrative175,000Total fixed cost per month$ 256,000

The product sells for $52 per unit. Production and sales data for July and August, the first two months of operations, follow:

Units ProducedUnits SoldJuly27,00023,000August27,00031,000

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

JulyAugustSales$ 1,196,000$ 1,612,000Cost of goods sold529,000713,000Gross margin667,000899,000Selling and administrative expenses221,000237,000Net operating income$ 446,000$ 662,000

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.