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$)$ $ $1,159,000$ $ $1,769,000$

Cost of goods sold $($@ $$34$ per unit$)646,000986,000$

Gross margin $513,000783,000$

Selling and administrative expenses$*308,000338,000$

Net operating income $ $205,000$ $ $445,000$

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

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

Direct materials $ $6$

Direct labor $9$

Variable manufacturing overhead $4$

Fixed manufacturing overhead $($$$360,000-$: $24,000$ units$)15$

Absorption costing unit product cost $ $34$

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

Year $1$ Year $2$

Units produced $24,00024,000$

Units sold $19,00029,000$

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.