6-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,6-1, LO6-2, LO6-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $61 per unit) Cost of goods sold (@ $29 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,037,000 Year 2 $1,647,000 493,000 783,000 544,000 864,000 306,000 336,000 238,000 $ 528,000 *$3 per unit variable; $255,000 fixed each year. The company's $29 unit product cost is omputed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($242,000 + 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Year 1 Year 2 22,000 17,000 22,000 27,000 $ 7 10 1 11 $ 29 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