During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows ear ear Sales (e $61 per unit) Cost of goods sold ( $32 per unit) Gross margin Selling and administrative expenses Net operating income $ 1,159,880 1,769,800 608,000 928,000 841,00e 5,e00 551,000 395,00033 5 1246,0001 586,000 $3 per unit variable: $248,000 fixed each year. The company's $32 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($264,00024,000 units) Absorption costing unit product cost 12 s 32 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