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 (@ $37 per unit) Gross margin Selling and administrative expenses Net operating income $3 per unit variable; $250,000 fixed each year. Year 1 $ 1,216,000 703,000 513,000 307,000 $206,000 The company's $37 unit product cost is computed as follows: Direct materials" Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($480,000 + 24,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: Year 2 $ 1,856,000 1,073,000 783,000 337,000 $ 446,000 $5 10 2 20 $ 37 Units produced Units sold Required: Year 1 Year 2 24,000 24,000 19,000 29,000 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.