During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $61 per unit) Cost of goods sold (@ $33 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $1,220,000 660,000 560,000 310,000 $ 250,000 Year 2 $1,830,000 990,000 840,000 340,000 $ 500,000 *$3 per unit variable; $250,000 fixed each year. The company's $33 unit product cost is computed as follows: $ 5 10 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 + 25,000 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 operations are: Units produced Units sold Year 1 25,000 20,000 Year 2 25,000 30,000 Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Year 2 Absorption costing net operating income