During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year -2 Sales (@ $63 per unit) $ 1, 134, 000 $ 1, 764,000 Cost of goods sold (@ $35 per unit) 630,000 980 , 900 Gross margin 504, 000 784,000 Selling and administrative expenses* 302,000 332,000 Net operating income $ 202,000 $ 452,000 *$3 per unit variable; $248,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials $ 9 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($299,000 : 23,000 units) 13 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23, 600 Units sold 18,000 28, 080 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