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

Variable costs per unit:Direct materials$ 5Direct labor10Variable manufacturing overhead2Variable selling and administrative1Total variable cost per unit$ 18Fixed costs per month:Fixed manufacturing overhead$ 90,000Fixed selling and administrative169,000Total fixed cost per month$ 259,000

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

Units ProducedUnits SoldJuly18,00014,000August18,00022,000

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

JulyAugustSales$ 728,000$ 1,144,000Cost of goods sold308,000484,000Gross margin420,000660,000Selling and administrative expenses183,000191,000Net operating income$ 237,000$ 469,000

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.