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

Variable costs per unit:
Direct materials			$	3
Direct labor				12
Variable manufacturing overhead				4
Variable selling and administrative				2
Total variable cost per unit			$	21
Fixed costs per month:
Fixed manufacturing overhead	$	60,000
Fixed selling and administrative		166,000
Total fixed cost per month	$	226,000

The product sells for $50 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	15,000	11,000
August	15,000	19,000

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

	July			August
Sales	$	550,000		$	950,000
Cost of goods sold		253,000			437,000
Gross margin		297,000			513,000
Selling and administrative expenses		188,000			204,000
Net operating income	$	109,000		$	309,000

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.

1-1 liilaIIIIIII: IR III rall FILFIE all Danon Canan Variable Costing Income Statement July Luque ASSAI . . . . 1- -- | alc HR WINONGulul utaw Vatlabdaropen Auguel cancis of wil Curling and Asian Couting Nel Osting Inc July - * '/ * 41 Malawi. S NACH IMMERSING og paragno: Sporting incomo o Posters Total variables Tonth Marin SAS Shens man tart. ICH I WA NI Puts ) Totalte om Netocorytino : 550,000 3 050 000 Denton Company manufactures and sells a single product Cost data for the product are given: $ 12 4 2 Varih Hamil: Direct scorials Direct lobor Variate manutecturing overhead Varixling Hinili Toll FR per il Fixed costs par ronth: Pixed marufacturing overhead Fixed selling and administrative Total fixed cost per month S21 $ 68,020 160,000 $ 726,0 The product sells for $50 per unit. Production and sales data for July and Aligust, the first two months of operations, follow: THE Produced 15,000 15.00 July August Sold 11,098 19, 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 Het operating income July August $ 550,000 $ $ 950,000 753,200 477,600 513,628 181,200 224,000 5127, $ 29,90