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

Variable costs per unit:Direct materials$4Direct labor12Variable manufacturing overhead3Variable selling and administrative2Total variable cost per unit$21Fixed costs per month:Fixed manufacturing overhead$84,000Fixed selling and administrative166,000Total fixed cost per month$250,000

The product sells for $53 per unit. Production and sales data for July and August, the first two months of operations, follow:

Units

ProducedUnits

SoldJuly21,00017,000August21,00025,000

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

JulyAugustSales$901,000$1,325,000Cost of goods sold391,000575,000Gross margin510,000750,000Selling and administrative expenses200,000216,000Net operating income$310,000$534,000

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 manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 12 Variable manufacturing overhead 3 Variable selling and administrative Total variable cost per unit 5 21 Fixed costs per month: Fixed manufacturing overhead $ 84,000 Fixed selling and administrative 166,000 Total fixed cost per month $ 250,000 I The product sells for $53 per unit. Production and sales data for July and August, the rst two months of operations, follow: Units Units Produced Sold July 21,000 17,000 August 21,000 25,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August sales $ 901,000 $ 1,325,000 Cost of goods sold 391,000 575,000 Gross margin 510,000 750,000 Selling and administrative expenses 200,000 216,000 Net operating income $ 310,000 $ 534,000