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) $ 992,000 $ 1,612,000 Cost of goods sold (@ $39 per unit) 624,000 1,014,000 Gross margin 368,000 598,000 Selling and administrative expenses* 301,000 331,000 Net operating income $ 67,000 $ 267,000 * $3 per unit variable; $253,000 fixed each year. The companys $39 unit product cost is computed as follows: Direct materials $ 9 Direct labor 12 Variable manufacturing overhead 2 Fixed manufacturing overhead ($336,000 21,000 units) 16 Absorption costing unit product cost $ 39 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.