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$)$ $ $1,037,000$ $ $1,647,000$

Cost of goods sold $($@ $$30$ per unit$)510,000810,000$

Gross margin $527,000837,000$

Selling and administrative expenses$*305,000335,000$

Net operating income $ $222,000$ $ $502,000$

$*$ $$3$ per unit variable; $$254,000$ fixed each year.

The company$$s $$30$ unit product cost is computed as follows:

Direct materials $ $6$

Direct labor $9$

Variable manufacturing overhead $1$

Fixed manufacturing overhead $($$$308,000-$: $22,000$ units$)14$

Absorption costing unit product cost $ $30$

Production and cost data for the first two years of operations are:

Year $1$ Year $2$

Units produced $22,00022,000$

Units sold $17,00027,000$

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.