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

Variable costs per unit:

Direct materials $ $6$

Direct labor $10$

Variable manufacturing overhead $2$

Variable selling and administrative $1$

Total variable cost per unit $ $19$

Fixed costs per month:

Fixed manufacturing overhead $ $63,000$

Fixed selling and administrative $163,000$

Total fixed cost per month $ $226,000$

The product sells for $$48$ per unit. Production and sales data for July and August, the first two months of operations, follow:

Units Produced Units Sold

July $21,00017,000$

August $21,00025,000$

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

July August

Sales $ $816,000$ $ $1,200,000$

Cost of goods sold $357,000525,000$

Gross margin $459,000675,000$

Selling and administrative expenses $180,000188,000$

Net operating income $ $279,000$ $ $487,000$

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.