During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 $ 1,140,000 741,000 399,000 307,000 Year 2 Sales (e $60 per unit) Cost of goods sold ( $39 per unit) Gross margin Selling and administrative expenses $1,740,000 1,131,000 609,000 337,000 Net operating income 92,000 272,000 $3 per unit variable; $250,000 fixed each year The company's $39 unit product cost is computed as follows Direct materials $ 10 13 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($336,000 24,000 units) Absorption costing unit product cost 14 $ 39 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges or production equipment and buildings Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 24,000 19,000 24,000 29,000 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