During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 976,000 $ 1,586,000 Cost of goods sold (@ $28 per unit) 448,000 728,000 Gross margin 528,000 858,000 Selling and administrative expenses* 295,000 325,000 Net operating income $ 233,000 $ 533,000 * $3 per unit variable; $247,000 fixed each year. The companys $28 unit product cost is computed as follows: Direct materials $ 8 Direct labor 8 Variable manufacturing overhead 1 Fixed manufacturing overhead ($231,000 21,000 units) 11 Absorption costing unit product cost $ 28 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 n