Denton Company manufactures and sells a single product. Cost data for the product are given below: Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 10 Total variable cost per unit Fixed costs per month 25 Fixed manufacturing overhead Fixed selling and administrative $ 315,000 245,000 $560,000 Total fixed cost per month The product sells for $60 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Units Produced Sold July 17,500 15,000 August 17,500 20,000 The company's Accounting Department has prepared absorption costing income statements for July and August as presented below July 600,000 290,000 August Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $ 900,000 $1,200,000 800,000 $300,000 400,000 305,000 $10,000 $ 95,000