During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$60 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,080,000 630,000 450,000 306,000 $ 144,000 Year 2 $ 1,680,000 980,000 700,000 336,000 $ 364,000 *$3 per unit variable; $252,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($253,000 = 23,000 units) Absorption costing unit product cost $ 9 11 4 11 $ 35 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23,000 18,000 Year 2 23,000 28,000 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 Year 2 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income