During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$63 per unit) Cost of goods sold (@ $36 per unit) Gross margin Selling and administrative expenses Net operating income *$3 per unit variable: $254,000 fixed each year. Year 1 $ 1,071,000 612,000 459,000 305,000 $ 154,000 The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($264,000 + 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 2 $ 1,701,000 972,000 729,000 335,000 $ 394,000 $ 9 10 5 12 $ 36 Units produced Units sold Required: Year 1 Year 2 22,000 22,000 17,000 27,000 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