During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ($60 per unit) Cost of goods sold ( $29 per unit) Gross margin Selling and administrative expenses* Net operating income $3 per unit variable; $251,000 fixed each year. $ 1,020,000 $1,620,000 493,000 Year 1 Year 21 783,000 837,000 302,000 332,000 $225,000 $ 505,000 527,000 The company's $29 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($242,000 22,000 units) Absorption costing unit product cost Production and cost data for the first two years of operations are: $5 8 5 11 $ 29 Units produced Units sold Year 1 Year 2 22,000 22,000 17,000 27,000 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.