Document1 - Word X FILE HOME INSERT DESIGN PAGE LAYOUT REFERENCES MAILINGS REVIEW VIEW Sign in During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $1, 098, 000 $1, 708, 000 Cost of goods sold (@ $31 per unit) 558, 000 868 , 000 Gross margin 540,000 840, 000 Selling and administrative expenses* 302, 000 332, 000 Net operating income 238 , 000 508, 000 * $3 per unit variable; $248,000 fixed each year. The company's $31 unit product cost is computed as follows: Direct materials $ 6 Direct labor 11 Variable manufacturing overhead 2 Fixed manufacturing overhead ($276,000 : 23,000 units) 12 Absorption costing unit product cost $31 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: Year 1 Year 2 Units produced 23, 000 23, 000 Units sold 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. PAGE 1 OF 1 194 WORDS + 100% X 7:56 PM O W zoom 10/5/2022