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$)$ $ $992,000$ $ $1,612,000$

Cost of goods sold $($@ $$37$ per unit$)592,000962,000$

Gross margin $400,000650,000$

Selling and administrative expenses$*299,000329,000$

Net operating income $ $101,000$ $ $321,000$

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

The company$$s $$37$ unit product cost is computed as follows:

Direct materials $ $8$

Direct labor $10$

Variable manufacturing overhead $3$

Fixed manufacturing overhead $($$$336,000-$: $21,000$ units$)16$

Absorption costing unit product cost $ $37$

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

Year $1$ Year $2$

Units produced $21,00021,000$

Units sold $16,00026,000$

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.