Problem 6-22 Prepare and Reconcile Variable Costing Statements [LO6-1, LO6-2, LO6-3]

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

Variable costs per unit:
Direct materials		$5
Direct labor		11
Variable manufacturing overhead		4
Variable selling and administrative		1
Total variable costs per unit		$21
Fixed costs per month:
Fixed manufacturing overhead	$	96,000
Fixed selling and administrative		166,000
Total fixed cost per month	$	262,000

The product sells for $53 per unit. Production and sales data for July and August, the first two months of operations, are as follows:

	Units Produced	Units Sold
July	24,000	20,000
August	24,000	28,000

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

	July		August
Sales	$	1,060,000	$	1,484,000
Cost of goods sold		480,000		672,000
Gross margin		580,000		812,000
Selling and administrative expenses		186,000		194,000
Net operating income	$	394,000	$	618,000

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.

Company sells a single prodat cost orthe Podat are gven below variable manutactuing overhead Vanable selling and admnstrafve Total variable costs per Faeed costs per 96.000 Fixed manufacturing overhead 166.000 Foxed selling and $262,000 Total faed cost per The product sells for s53 per unit Producton and sales data for July and August the frst two months of operations, are as follows The company's has prepared absorption costing income statements for as presented below 51 484 000 $1060.000 Seling and administrative expenses S 618,000 394,000 betemine the unit product cost under absorption costing and variable cestng WA