During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows:

	Year 1	Year 2
Sales (@ $64 per unit)	$ 1,024,000	$ 1,664,000
Cost of goods sold (@ $34 per unit)	544,000	884,000
Gross margin	480,000	780,000
Selling and administrative expenses*	300,000	330,000
Net operating income	$ 180,000	$ 450,000

* $3 per unit variable; $252,000 fixed each year.

The companys $34 unit product cost is computed as follows:

Direct materials	$ 9
Direct labor	10
Variable manufacturing overhead	4
Fixed manufacturing overhead ($231,000 21,000 units)	11
Absorption costing unit product cost	$ 34

Production and cost data for the first two years of operations are:

	Year 1	Year 2
Units produced	21,000	21,000
Units sold	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.

Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) concile the absorption costing and the variable costing net operating income figures for each year