Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 3 Direct labor 11 Variable manufacturing overhead 2 Variable selling and administrative 2 Total variable cost per unit $ 18 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 $53 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 $ 583,000 $ 1,007,000 Cost of goods sold 242,000 418,000 Gross margin 341,000 589,000 Selling and administrative expenses 185,000 201,000 Net operating income $ 156,000 $ 388,000

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.