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.

$ 4 11 3 3 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 $ 21 $ 120,000 175,000 $ 295,000 The product sells for $48 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced 30,000 30,000 Units Sold 26,000 34,000 July August 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 $1,248,000 572,000 676,000 253,000 $ 423,000 August $ 1,632,000 748,000 884,000 277,000 $ 607,000 Required: 1. Determine the unit product cost under: a. Absorption costing