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Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation (L06-1, LO6-2, L06-3) oo 9 4 Denton Company manufactures and sells a single product. Cost data

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Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation (L06-1, LO6-2, L06-3) oo 9 4 Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 6 Direct labor Variable manufacturing overhead Variable selling and 1 administrative Total variable cost per unit $ 20 Fixed costs per month: Fixed manufacturing overhead 135,000 Fixed selling and administrative 169,000 Total fixed cost per month 304,000 The product sells for $47 per unit Production and sales data for July and August, the first two months of operations, follow. Units Units Produced Sold July 27,000 23,000 August 27,000 31,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August July August Sales $ 1,081,000 1,457,000 Cost of goods sold 552,000 744,000 Gross margin 529,000 713,000 Selling and administrative expenses 192,000 200,000 Net operating income $ 337,000 $ 513,000 $ * 200 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. Required Required Required 1 2 3 Determine the unit product cost under: (a) Absorption costing, (b) Variable costing. Unit Product Cost a. Absorption costing b. Variable costing Required 2 > Required Required Required 1 2 3 Prepare variable costing income statements for July and August. Denton Company Variable Costing Income Statement July August Net operating income (loss) Required Required Required 1 2 3 Reconcile the variable costing and absorption costing net operating incomes. (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)

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