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 (@ $41 per unit) Gross margin Selling and administrative expenses* Net operating income Year $ 1,008,000 656,000 352,000 294,000 $ 58,000 Year 2 $ 1,638,000 1,066,000 572,000 324,000 $ 248,000 $3 per unit variable; $246,000 fixed each year. The company's $41 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($420,000 + 21,000 units) Absorption costing unit product cost $ 9 8 4 20 $41 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