During Heaton Company$$s first two years of operations, it reported absorption costing net operating income as follows:

Year $1$ Year $2$

Sales $($@ $$62$ per unit$)$ $ $930,000$ $ $1,550,000$

Cost of goods sold $($@ $$35$ per unit$)525,000875,000$

Gross margin $405,000675,000$

Selling and administrative expenses$*291,000321,000$

Net operating income $ $114,000$ $ $354,000$

$*$ $$3$ per unit variable; $$246,000$ fixed each year.

The company$$s $$35$ unit product cost is computed as follows:

Direct materials $ $6$

Direct labor $8$

Variable manufacturing overhead $2$

Fixed manufacturing overhead $($$$380,000-$: $20,000$ units$)19$

Absorption costing unit product cost $ $35$

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

Year $1$ Year $2$

Units produced $20,00020,000$

Units sold $15,00025,000$

Required:

Using variable costing, what is the unit product cost for both years?

What is the variable costing net operating income in Year $1$ and in Year $2?$

Reconcile the absorption costing and the variable costing net operating income figures for each year.