During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Sales ($61 per unit) $ 1,098,000 Year 2 $ 1,708,000 Cost of goods sold (@ $39 per unit) 702,000 1,092,000 Gross margin 396,000 302,000 616,000 332,000 $ 94,000 $ 284,000 Selling and administrative expenses* Net operating income * $3 per unit variable; $248,000 fixed each year. The company's $39 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($460,000 + 23,000 units) Absorption costing unit product cost $ 7 11 1 20 $ 39 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold Required: 23,000 18,000 23,000 28,000 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. 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.) Year 1 Year 2 Net operating income (loss) < Required 1 Required 3 >