During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$64 per unit) Cost of goods sold (@ $34 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,280,000 Year 2. $1,920,000 680,000 600,000 307,000 $ 293,000 1,020,000 900,000 337,000 $ 563,000 $3 per unit variable; $247,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($425,000 + 25,000 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 25,000 25,000 20,000 30,000 $7 9 1 17 $ 34 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.