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 $2$

Variable selling and administrative $1$

Total variable cost per unit $ $18$

Fixed costs per month:

Fixed manufacturing overhead $ $105,000$

Fixed selling and administrative $163,000$

Total fixed cost per month $ $268,000$

The product sells for $$47$ 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 has prepared the following absorption costing income statements for July and August:

July August

Sales $ $799,000$ $ $1,175,000$

Cost of goods sold $374,000550,000$

Gross margin $425,000625,000$

Selling and administrative expenses $180,000188,000$

Net operating income $ $245,000$ $ $437,000$

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.