During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows:

I IEDE GALES IF SEZ PER Unit ! 1 , 240 , 000 5 1 , 860 , OOD Cost Of goods sold 1} $34 BET Unit ! GEO , 000 1 , 020 , 000 GLOSS MALY 1 !I 560, 000 BAD , OOD Golling and administrative EXPENSES* 308 , 000 3 30, 000 HEt Operating INCOME 5 $252 , 000') 502, 000DIRECT Materials 5 10 Direct Labor 10 Variable manufacturing overhead Fixed manufacturing overhead 15300 , 000 + 25, 000 units ! 1 2 Absorption costing unit product cost 5 3 4Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income