Problem 6-22 (Static) 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 $ 7 10 5 3 $ 25 $ 315,000 245,000 $ 560,000 The product sells for $60 per unit. Production and sales data for July and August, the first two months of operations, follow: Units July August Units Produced 17,500 17,500 15,000 20,000 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 $ 900,000 600,000 300,000 290,000 $ 10,000 August $ 1,200,000 800,000 400,000 305,000 95,000 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