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

Variable costs per unit:
Direct materials	$ 3
Direct labor	9
Variable manufacturing overhead	3
Variable selling and administrative	3
Total variable cost per unit	$ 18
Fixed costs per month:
Fixed manufacturing overhead	$ 108,000
Fixed selling and administrative	163,000
Total fixed cost per month	$ 271,000

The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	27,000	23,000
August	27,000	31,000

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

	July	August
Sales	$ 1,058,000	$ 1,426,000
Cost of goods sold	437,000	589,000
Gross margin	621,000	837,000
Selling and administrative expenses	232,000	256,000
Net operating income	$ 389,000	$ 581,000

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.