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) Year 1 $ 1,134,000 648,000 Year 2 $ 1,764,000 1,008,000 Gross margin Selling and administrative expenses* 486,000 305,000 756,000 335,000 Net operating income $ 181,000 $ 421,000 * * $3 per unit variable; $251,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($345,000 23,000 units) Absorption costing unit product cost $ 8 11 2 15 $ 36 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 18,000 23,000 28,000 Units sold 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