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 (@ $34 per unit) Gross margin Selling and administrative expenses Net operating Income $3 per unit variable, $248,000 fixed each year. Year 1 $ 1,071,000 578,000 Year 2 $ 1,701,000 918,000 493,000 299,000 783,000 329,000 $194,000 $454,000 The company's $34 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($308,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: 11 2 14 $ 34 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