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

Variable costs per unit:

Direct materials $ $5$

Direct labor $12$

Variable manufacturing overhead $4$

Variable selling and administrative $2$

Total variable cost per unit $ $23$

Fixed costs per month:

Fixed manufacturing overhead $ $120,000$

Fixed selling and administrative $175,000$

Total fixed cost per month $ $295,000$

The product sells for $$49$ per unit. Production and sales data for July and August, the first two months of operations, follow:

Units Produced Units Sold

July $24,00020,000$

August $24,00028,000$

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

July August

Sales $ $980,000$ $ $1,372,000$

Cost of goods sold $520,000728,000$

Gross margin $460,000644,000$

Selling and administrative expenses $215,000231,000$

Net operating income $ $245,000$ $ $413,000$

Required:

Determine the unit product cost under:

Absorption costing.

Variable costing.

Prepare variable costing income statements for July and August.

Reconcile the variable costing and absorption costing net operating incomes.