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Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor

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 2
Total variable cost per unit $ 20
Fixed costs per month:
Fixed manufacturing overhead $ 135,000
Fixed selling and administrative 163,000
Total fixed cost per month $ 298,000
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 27,00023,000
August 27,00031,000
The companys Accounting Department has prepared the following absorption costing income statements for July and August:
July August
Sales $ 1,219,000 $ 1,643,000
Cost of goods sold 529,000713,000
Gross margin 690,000930,000
Selling and administrative expenses 209,000225,000
Net operating income $ 481,000 $ 705,000
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.

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