5 During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows Year 2 1,736,000 Year 1 Sales( $62 per unit) Cost of goods sold ( $35 per unit) Gross margin Selling and administrative expenses* Net operating income $1,116,000 630,000 486,000 301,000 980,000 756,000 3330en 331,000 1185,00 425,0e 425,000 $3 per unit variable; $247000 fixed each year. The company's $35 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($299,000 23,000 units) Absorption costing unit product cost 10 13 $ 35 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings Production and cost data for the first two years of operations are Units produced Units sold Year 1 Year 2 23,000 23,000 18,000 28,000 Required 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year