During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows Year 1 Year 2 Sales (e $61 per unit) Cost of goods sold ( $39 per unit) Gross margin Selling and administrative expenses Net operating income $1,098,000 1,708,000 702,000 11092000_ 396,000 616,000 301,000331,000 $ 195,0001285,000 *$3 per unit variable; $247,000 fixed each year. The company's $39 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391,000 23,000 units) Absorption costing unit product cost 9 17 S 39 Forty percent of fixed manufacturing overhead consists of wages and salaries, the remainder consists of depreciation charges on production equipment and buildings Production and cost data for the first two years of operatons are: Units produced Units sold Year 1 Year 2 23,000 23, 000 18,000 28,000 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 Required 1Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? Year 1 Year 2 Net operating income (loss) Required 1Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income