During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows Year1 Year 2 Sales (e $25 per unit) Cost of goods sold (e $18 per unit) Gross margin Selling and administrative expenses* Net operating income $ 1,000,000 $ 1,250,000 900,000 350,000 230,000 $ 70,000 $120,000 720,000 280,000 210,000 *$2 per unit variable; $130,000 fixed each year The company's $18 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($270,00045,000 units) Absorption costing unit product cost $ 18 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 45,000 45, 000 40,000 50,000 Units produced Units sold 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. Using variable costing, what is the unit product cost for both years? Unit product cost What is the variable costing net operating income in Year 1 and in Year 2? Year 1 Year 2 Net operating income (loss) Reconcile the absorption costing and the variable costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss)