During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,071,000 $ 1,701,000 Cost of goods sold (@ $42 per unit) 714,000 1,134,000 Gross margin 357,000 567,000 Selling and administrative expenses* 303,000 333,000 Net operating income $ 54,000 $ 234,000 * $3 per unit variable; $252,000 fixed each year. The companys $42 unit product cost is computed as follows: Direct materials $ 8 Direct labor 12 Variable manufacturing overhead 3 Fixed manufacturing overhead ($418,000 22,000 units) 19 Absorption costing unit product cost $ 42 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 22,000 Units sold 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.