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$)$ $ $1,098,000$ $ $1,708,000$

Cost of goods sold $($@ $$34$ per unit$)612,000952,000$

Gross margin $486,000756,000$

Selling and administrative expenses$*301,000331,000$

Net operating income $ $185,000$ $ $425,000$

$*$ $$3$ per unit variable; $$247,000$ fixed each year.

The company$$s $$34$ unit product cost is computed as follows:

Direct materials $ $10$

Direct labor $10$

Variable manufacturing overhead $2$

Fixed manufacturing overhead $($$$276,000-$: $23,000$ units$)12$

Absorption costing unit product cost $ $34$

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

Year $1$ Year $2$

Units produced $23,00023,000$

Units sold $18,00028,000$

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.