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

Variable costs per unit:
Direct materials			$	5
Direct labor				10
Variable manufacturing overhead				3
Variable selling and administrative				3
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 $50 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	24,000	20,000
August	24,000	28,000

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

	July			August
Sales	$	1,000,000		$	1,400,000
Cost of goods sold		460,000			644,000
Gross margin		540,000			756,000
Selling and administrative expenses		226,000			250,000
Net operating income	$	314,000		$	506,000

Required:

1. Determine the unit product cost under: (a) Absorption costing, (b) Variable costing. Need help for absorption

		Unit Product Cost
a.	Absorption costing	???
b.	Variable costing	$18

2. Prepare variable costing income statements for July and August. These are correct

Denton Company
Variable Costing Income Statement
	July	August
Saless	$1,000,000	$1,400,000
Variable expenses:
Variable cost of goods sold	360,000	504,000
Variable selling and administrative expenses	60,000	84,000
Total variable expenses	420,000	588,000
Contribution margin	580,000	812,000
Fixed expenses:
Fixed manufacturing overhead	120,000	120,000
Fixed selling and administrative expenses	166,000	166,000
Total fixed expense	286,000	286,000
Net operating income (loss)	$294,000	$526,000

3. Reconcile the variable costing and absorption costing net operating incomes. (Enter any losses or deductions as a negative value.) Not quite sure here either, please explain

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
	July	August
Variable costing net operating income (loss)
Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing
Absorption costing net operating income (loss)