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

Variable costs per unit:

Direct materials $6

Direct labor $10

Variable manufacturing overhead $3

Variable selling and administrative $1

Total variable cost per unit $20

Fixed costs per month:

Fixed manufacturing overhead $96,000

Fixed selling and administrative 160,000

Total fixed cost per month $256,000

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 company's 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 460,000 644,000

Gross margin 500,000 700,000

Selling and administrative expenses 180,000 188,000

Net operating income $320,000 $512,000

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.

1. Determine the unit product cost under: (a) Absorption costing, (b) Variable costing.

1b.Prepare variable costing income statements for July and August.

1c. Reconcile the variable costing and absorption costing net operating incomes.(Enter any losses or deductions as a negative value.)