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During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ( @ $

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During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1Year 2Sales (@ $61 per unit)$ 1,098,000$ 1,708,000Cost of goods sold (@ $39 per unit)702,0001,092,000Gross margin396,000616,000Selling and administrative expenses*306,000336,000Net operating income$ 90,000$ 280,000* $3 per unit variable; $252,000 fixed each year.The companys $39 unit product cost is computed as follows:Direct materials$ 8Direct labor11Variable manufacturing overhead3Fixed manufacturing overhead ($391,000-: 23,000 units)17Absorption costing unit product cost$ 39Production and cost data for the first two years of operations are: Year 1Year 2Units produced23,00023,000Units sold18,00028,000Required:Using variable costing, what is the unit product cost for both years?What is the variable costing net operating income in Year 1 and in Year 2?Reconcile the absorption costing and the variable costing net operating income figures for each year.
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