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.

Denton Company manufactures and sells a single product. Cost data for the product are given: The product sells for $45 per unit. Production and sales data for July and August, the first two months of operations, follow: The company's Accounting Department has prepared the following absorption costing income statements for July and August