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 $($@ $$36$ per unit$)684,0001,044,000$

Gross margin $475,000725,000$

Selling and administrative expenses$*306,000336,000$

Net operating income $ $169,000$ $ $389,000$

$*$ $$3$ per unit variable; $$249,000$ fixed each year.

The company$$s $$36$ unit product cost is computed as follows:

Direct materials $ $7$

Direct labor $11$

Variable manufacturing overhead $2$

Fixed manufacturing overhead $($$$384,000-$: $24,000$ units$)16$

Absorption costing unit product cost $ $36$

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

Year $1$ Year $2$

Units produced $24,00024,000$

Units sold $19,00029,000$