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	3
Total variable cost per unit	$ 21
Fixed costs per month:
Fixed manufacturing overhead	$ 108,000
Fixed selling and administrative	172,000
Total fixed cost per month	$ 280,000

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	18,000	14,000
August	18,000	22,000

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

	July	August
Sales	$ 644,000	$ 1,012,000
Cost of goods sold	336,000	528,000
Gross margin	308,000	484,000
Selling and administrative expenses	214,000	238,000
Net operating income	$ 94,000	$ 246,000

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.