During Denton Company's first two years of operations, the company reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $60 per unit) $1,020,000 $1,620,000 Cost of goods sold (@ $35 per unit) 595,000 945,000 425,000 675,000 Gross margin Selling and administrative expenses* 304,000 334,000 Net operating income $ 1121,000 $341,000 *$3 per unit variable: $253,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000 = 22,000 units) N00 Absorption costing unit product cost $35 Production and cost data for the two years are given below: Units produced Units sold Year 1 22,000 17,000 Year 2 22,000 27,000 Required: 1. Prepare a variable costing contribution format income statement for each year. (Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.) Variable Costing Income Statement Year 1 $ 1020000 Year 2 $ 1620000 Sales Variable expenses: Variable cost of goods sold MM 357000 51000 567000] 81000 | Variable selling and administrative expenses Total variable expenses 408000 648000 I Contribution margin Fixed expenses: Fixed manufacturing overhead MM 308000 253000 308000 253000 | Fixed selling and administrative expenses Total fixed expenses 561000 561000 Total fixed expenses 561000 561000 Net operating income (loss) $ 51000 $D 2. Reconcile the absorption costing and variable costing net operating income figures for each year. (Loss amounts and amounts to be deducted should be indicated with a minus sign. Omit the "$" sign in your response.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income $ 51000 (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing 70000 |-70000 Absorption costing net operating income (loss) $ 121000