During Heaton Company's first two years of operations. it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ l,95d,999 $ 1,6?4,999 Cost of goods sold {@ $38 per unit} 646,999 1,926,999 Gross margin 498,999 648,999 Selling and administrative expenses* 395,999 335,999 Net operating income $ 133,999 $ 3132999 "' $3 per unit variable; $254,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials $ 19 Direct labor 11 Variable manufacturing overhead 1 Fixed manufacturing overhead ($352,999 + 22,999 units) 16 bsorption costing unit product cost $ 38 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,999 22,999 Units sold 1?,666 2?,999 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. Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus Sign.) Required 1 Required 2 Required 3 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income