During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,178,000 $ 1,798,000 Cost of goods sold (@ $35 per unit) 665,000 1,015,000 Gross margin 513,000 783,000 Selling and administrative expenses* 304,000 334,000 Net operating income $ 209,000 $ 449,000 * $3 per unit variable; $247,000 fixed each year. The companys $35 unit product cost is computed as follows: Direct materials $ 8 Direct labor 10 Variable manufacturing overhead 4 Fixed manufacturing overhead ($312,000 24,000 units) 13 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 24,000 24,000 Units sold 19,000 29,000 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.