During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $62 per unit) Cost of goods sold (@ $41 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 992,000 656,000 336,000 299,000 $ 137,0001 Year 2 $1,612,000 1,066,000 546,000 329,000 $ 217,000 *$3 per unit variable; $251,000 fixed each year. The company's $41 unit product cost is computed as follows: $ 10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($378,000 = 21,000 units) Absorption costing unit product cost 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 operatons are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 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