During Heaton Company's first two years of operations, it reported absorption costing net operating income as tollows Year Year 2 Sales (e $61 per unit) Cost of goods sold ( $32 per unit) Gross margin Selling and administrative expenses* Net operating income $ 976,000 $ 1,586,000 832,000 754,000 296,000 3201000 $1168,0001428,000 512,000 464,000 $3 per unit variable; $248,000 fixed each year. The company's $32 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($231,000 21,000 units) Absorption costing unit product cost 32 Forty percent of fixed manufacturing overhead consists of wages and salaries, the remainder consists of depreciation charges on production equipment and buildings Production and cost data for the first two years of operations are Units produced Units sold Year 1 Year 2 21,000 21,000 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