Duif Company's absorption costing income statements for the last two years are presented below: Year 1 Year 2 Sales $70,000 $90,000 Less cost of goods sold: Beginning inventory 0 6,000 Add cost of goods manufactured 48,000 48,000 Goods available for sale 48,000 54,000 Less ending inventory 6,000 0 Cost of goods sold 42,000 54,000 Gross margin 28,000 36,000 Less selling & admin. expenses 25,000 31,000 Net operating income $ 3,000 $ 5,000 Data on units produced and sold in each of these years are given below: Units in beginning inventory Units produced Units sold Year 1 Year 2 0 1,000 8,000 8,000 7,000 9,000 Fixed factory overhead totaled $16,000 in each year. This overhead was applied to products at a rate of $2 per unit. Variable selling and administrative expenses were $3 per unit sold.