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

Variable costs per unit:

Direct materials $ $4$

Direct labor $10$

Variable manufacturing overhead $4$

Variable selling and administrative $3$

Total variable cost per unit $ $21$

Fixed costs per month:

Fixed manufacturing overhead $ $72,000$

Fixed selling and administrative $172,000$

Total fixed cost per month $ $244,000$

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 $18,00014,000$

August $18,00022,000$

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

July August

Sales $ $644,000$ $ $1,012,000$

Cost of goods sold $308,000484,000$

Gross margin $336,000528,000$

Selling and administrative expenses $214,000238,000$

Net operating income $ $122,000$ $ $290,000$

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.