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Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing
Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 75, eee 169,000 $ 244, eee The product sells for $49 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Units Produced 15,000 15,000 July August Sold 11,000 19,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August $ Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income July $ 539,000 242,000 297,000 2e2,eee $ 95,000 August 931,000 418,000 513, eee 226.ee 287,00 $ 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
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