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

variable cost per unit:	direct materials	direct labor	variable manufacturing overhead	variable selling & administrative	total variable costs per month:	fixed costs per month:	fixed manufacturing overhead	fixed selling & administrative	total fixed costs per month:
	$7	$10	$5	$3	$25		$315,000	$245,000	$560,000

The product sells for $60 per unit. Production and sales data for July and August. The fist two months of operation. follow:

	units produced	units sold
July	17,500	15,000
August	17,500	20,000

The company's accounting department has prepared the following absorption costing income statements for July and August:

	July	August
Sales	$900,000	$1,200,000
cost of goods sold	$600,000	$800,000
gross margin	$300,000	$400,000
selling and administrative costs	$290,000	$305,000
net operating income	$10,000	$95,000

Required:

1. Determine the unit product cost under

a. absorption costing

b. variable costing

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

3. Reconcile the variable costing and absorption costing net operating incomes. this is where I am stuck

	July	August
variable costing net operating income (loss)		$140,000
add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing	$45,000
absorption costing net operating income (loss)	$10,000	$95,000