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

Variable costs per unit:
Direct materials			$	4
Direct labor				11
Variable manufacturing overhead				3
Variable selling and administrative				1
Total variable cost per unit			$	19
Fixed costs per month:
Fixed manufacturing overhead	$	90,000
Fixed selling and administrative		163,000
Total fixed cost per month	$	253,000

The product sells for $55 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	15,000	11,000
August	15,000	19,000

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

	July			August
Sales	$	605,000		$	1,045,000
Cost of goods sold		264,000			456,000
Gross margin		341,000			589,000
Selling and administrative expenses		174,000			182,000
Net operating income	$	167,000		$	407,000

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

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