During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 $ 1,612,000 858,000 Sales ($62 per unit) Cost of goods sold ( $33 per unit) Gross margin Selling and administrative expenses 992,000 528,000 464,000 00,000 754,000 330,000 $ Net operating income \164,0001 424,000 $3 per unit variable; $252,000 fixed each year. The company's $33 unit product cost is computed as follows: Direct materials 9 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($252,000 21,000 units) 12 33 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 operations are: Year 1 Year 2 Units produced Units sold 21,000 21,000 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