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 (e $38 per unit) Gross margin Selling and administrative expenses Net operating income *$3 per unit variable: $252,000 fixed each year. Year 1 $ 1,024,000 Year 2 $1,664,000 988,000 676,000 330,000 608,000 416,000 300,000 $ 346,000 $ 116,000 The company's $38 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($315,000 21,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: $ 6 13 4 15 $ 38 Units produced Units sold Year 1 Year 2 21,000 21,000 16,000 26,000 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.