Check m During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ( $62 per unit) Cost of goods sold (e $35 per unit) 1,178,eee Gross margin Selling and administrative expenses Net operating income 665,000 1,015 513,000 305,000 783,000 335,800 448,e00 288,e0e $3 per unit variable: $248,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($336,24,e80 units) Absorption costing unit product cost 13 14 s 35 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on