Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor 11 Variable manufacturing overhead 2 Variable selling and administrative 2 Total variable cost per unit $ 21 Fixed costs per month: Fixed manufacturing overhead $ 108,000 Fixed selling and administrative 169,000 Total fixed cost per month $ 277,000 The product sells for $47 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 $ 658,000 $ 1,034,000 Cost of goods sold 350,000 550,000 Gross margin 308,000 484,000 Selling and administrative expenses 197,000 213,000 Net operating income $ 111,000 $ 271,000

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 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 $ 6 11 2 2 $ 21 $ 108,000 169,000 $ 277,000 The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced 18,000 18,000 Units Sold 14,000 22,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: 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 $ 658,000 350,000 308,000 197,000 $ 111,000 August $ 1,034,000 550,000 484,000 213,000 $ 271,000 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