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Denton Company manufactures and sells a single product. Cost data for the product are given below:

Variable costs per unit:
Direct materials		$4
Direct labor		10
Variable manufacturing overhead		3
Variable selling and administrative		2
Total variable costs per unit		$19
Fixed costs per month:
Fixed manufacturing overhead	$	72,000
Fixed selling and administrative		169,000
Total fixed cost per month	$	241,000

The product sells for $47 per unit. Production and sales data for July and August, the first two months of operations, are as follows:

	Units Produced	Units Sold
July	18,000	14,000
August	18,000	22,000

The companys Accounting Department has prepared absorption costing income statements for July and August as presented below:

	July		August
Sales	$	658,000	$	1,034,000
Cost of goods sold		294,000		462,000
Gross margin		364,000		572,000
Selling and administrative expenses		197,000		213,000
Net operating income	$	167,000	$	359,000

Required:

1.	Determine the unit product cost under absorption costing and variable costing.

2.	Prepare contribution format variable costing income statements for July and August.

3.	Reconcile the variable costing and absorption costing net operating income.

2. Prepare contribution format variable costing income statements for July and August. Denton Company Variable Costing Income Statement July August Variable expenses Total variable expenses Fixed expenses: Total fixed expenses Net operating income (loss) 3. Reconcile the variable costing and absorption costing net operating income. 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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