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 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 $ 3 10 3 2 $ 18 $ 144,000 172,000 $ 316,000 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 24,000 24,000 Units Sold 20,000 28,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: Sales Cost of goods sold July $920,000 August $ 1,288,000 440,000 616,000 Gross margin 480,000 672,000 Selling and administrative expenses 212,000 228,000 Net operating income $ 268,000 $ 444,000