During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ( $61 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,037,000 1,647,000 612,00072. 000 675,000 304,000 334,000 425,000 1121,0001 341,000 $3 per unit variable; $253,000 fixed each year. The company's $36 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($396,000 Absorption costing unit product cost 22,000 units) 18 36 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 22,000 22,000 17,000 27,000 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