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				3
Variable selling and administrative				2
Total variable cost per unit			$	19
Fixed costs per month:
Fixed manufacturing overhead	$	54,000
Fixed selling and administrative		175,000
Total fixed cost per month	$	229,000

The product sells for $54 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	18,000	14,000
August	18,000	22,000

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

	July			August
Sales	$	756,000		$	1,188,000
Cost of goods sold		280,000			440,000
Gross margin		476,000			748,000
Selling and administrative expenses		203,000			219,000
Net operating income	$	273,000		$	529,000

Required:

2. Prepare contribution format variable costing income statements for July and August.

3. Reconcile the variable costing and absorption costing net operating incomes.

Prepare contribution format variable costing income statements for July and August. Denton Company Variable Costing Income Statement July August Net operating income (loss) 0 $