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 $2$

Variable selling and administrative $2$

Total variable cost per unit $ $20$

Fixed costs per month:

Fixed manufacturing overhead $ $150,000$

Fixed selling and administrative $160,000$

Total fixed cost per month $ $310,000$

The product sells for $$46$ per unit. Production and sales data for July and August, the first two months of operations, follow:

Units Produced Units Sold

July $30,00026,000$

August $30,00034,000$

The company$$s Accounting Department prepared the following absorption costing income statements for July and August:

July August

Sales $ $1,196,000$ $ $1,564,000$

Cost of goods sold $598,000782,000$

Gross margin $598,000782,000$

Selling and administrative expenses $212,000228,000$

Net operating income $ $386,000$ $ $554,000$

Required:

Determine the unit product cost under:

Absorption costing.

Variable costing.

Prepare variable costing income statements for July and August.

Reconcile the variable costing and absorption costing net operating incomes.