Problem 4-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO4-1, LO4-2, LO4-3] Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month $ 4 11 3 2 $ 20 $ 126,000 172,000 $ 298,000 The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, follow: July August Units Produced 21,000 21,000 Units Sold 17,000 25,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income July August $ 782,000 $ 1,150,000 408,000 600,000 374,000 206,000 550,000 222,000 $ 168,000 $ 328,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Determine the unit product cost under: (a) Absorption costing, (b) Variable costing. a. Absorption costing b. Variable costing Unit Product Cost Required 1 Required 2 Required 3 Prepare variable costing income statements for July and August. Denton Company Variable Costing Income Statement Net operating income (loss) July August Required 1 Required 2 Required 3 Reconcile the variable costing and absorption costing net operating incomes. Note: Enter any losses or deductions as a negative value. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes July August Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing Absorption costing net operating income (loss)