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

Year $1$ Year $2$

Sales $($@ $$64$ per unit$)$ $ $960,000$ $ $1,600,000$

Cost of goods sold $($@ $$39$ per unit$)585,000975,000$

Gross margin $375,000625,000$

Selling and administrative expenses$*296,000326,000$

Net operating income $ $79,000$ $ $299,000$

$*$ $$3$ per unit variable; $$251,000$ fixed each year.

The company$$s $$39$ unit product cost is computed as follows:

Direct materials $ $9$

Direct labor $11$

Variable manufacturing overhead $3$

Fixed manufacturing overhead $($$$320,000-$: $20,000$ units$)16$

Absorption costing unit product cost $ $39$

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.