Problem 6-22 (Algo) Variable Costing Income Statements; Income Reconciliation [LO6-1, LO6-2, LO6-3] Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials $ 4 Direct labor 10 Variable manufacturing overhead 3 Variable selling and administrative 3 Total variable cost per unit $ 20 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 $52 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced Units Sold July 24,000 20,000 August 24,000 28,000 The companys Accounting Department has prepared the following absorption costing income statements for July and August: July August Sales $ 1,040,000 $ 1,456,000 Cost of goods sold 440,000 616,000 Gross margin 600,000 840,000 Selling and administrative expenses 235,000 259,000 Net operating income $ 365,000 $ 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.