During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ($63 per unit). Cost of goods sold (@ $31 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $249,000 fixed each year. The company's $31 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($299,000 23,000 units) Absorption costing unit product cost $ 8 9 13 $ 31 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 Year 1 $ 1,134,000 558,000 Year 2 $ 1,764,000 868,000 576,000 303,000 896,000 333,000 $ 273,000 $ 563,000 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.