During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $63 per unit) Year 1 $ 1,197,000 Year 21 $1,827,000 Cost of goods sold (@ $34 per unit) Gross margin Selling and administrative expenses Net operating income 646,000 551,000 306,000 986,000 841,000 336,000 $ 245,000 $ 505,000 *$3 per unit variable: $249,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($312,000 + 24,000 units) Absorption costing unit product cost $ 7 9 5 13 $ 34 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 24,000 24,000 19,000 29,000 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.