During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,008,000 $ 1,638,000 Cost of goods sold (@ $34 per unit) 544,000 884,000 Gross margin 464,000 754,000 Selling and administrative expenses* 302,000 332,000 Net operating income $ 162,000 $ 422,000 * $3 per unit variable; $254,000 fixed each year. The companys $34 unit product cost is computed as follows: Direct materials $ 6 Direct labor 12 Variable manufacturing overhead 4 Fixed manufacturing overhead ($252,000 21,000 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 21,000 21,000 Units sold 16,000 26,000 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.