During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ($60 per unit) Cost of goods sold ( $41 per unit) Gross margin Year 1 $960,000 Year 2 $ 1,560,000. 656,000 304,000 302,000 1,066,000 494,000 332,000 $ 2,000 $ 162,000 Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $41 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($399,000 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Units produced Units sold Required: Year 1 Year 2 21,000 21,000 16,000 26,000 $ 6 13 3 19 $ 41 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 27 (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating Income (loss) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income