During Durton Company's first two years of operations, the company reported variable costing operating income as shown below. Production and cost data for the two years are given: Units produced Units sold Year 1 Year 2 25,000 20,000 30,000 25,000 Year 1 Sales (at $50 per unit) Variable expenses: $1,000,000 Year 2 $1,500,000 Variable cost of goods sold (at $20 per unit) 400,000 600,000 Variable selling and administrative costs (at $3 per unit) 60,000 90,000 Total variable expenses 460,000 690,000 Contribution margin 540,000 810,000 Fixed expenses: Fixed manufacturing overhead 350,000 350,000 Fixed selling and administrative Total fixed expenses 250,000 250,000 600,000 600,000 Operating income (loss) $ (60,000) $210,000 The company's $20 unit product cost is computed as follows: Direct materials $ 8 Direct labour Unit product cost 18 Variable manufacturing overhead 2 $28