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

Variable costs per unit:

Direct materials $ $5$

Direct labor $12$

Variable manufacturing overhead $3$

Variable selling and administrative $1$

Total variable cost per unit $ $21$

Fixed costs per month:

Fixed manufacturing overhead $ $120,000$

Fixed selling and administrative $166,000$

Total fixed cost per month $ $286,000$

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 $30,00026,000$

August $30,00034,000$

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

July August

Sales $ $1,196,000$ $ $1,564,000$

Cost of goods sold $624,000816,000$

Gross margin $572,000748,000$

Selling and administrative expenses $192,000200,000$

Net operating income $ $380,000$ $ $548,000$

Required:

Determine the unit product cost under:

Absorption costing.

Variable costing.

Prepare variable costing income statements for July and August.

Reconcile the variable costing and absorption costing net operating incomes.