During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 915,000 $ 1,525,000 Cost of goods sold (@ $40 per unit) 600,000 1,000,000 Gross margin 315,000 525,000 Selling and administrative expenses* 296,000 326,000 Net operating income $ 19,000 $ 199,000 * $3 per unit variable; $251,000 fixed each year. The company's $40 unit product cost is computed as follows: Direct materials 5 9 Direct labor 10 Variable manufacturing overhead 2 Fixed manufacturing overhead ($380,000 + 20,000 units) 19 Absorption costing unit product cost $ 40 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 20,000 20,000 Units sold 15,000 25,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost $ 21 Required 2 > Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? Note: Loss amounts should be indicated with a minus sign. Year 1 Year 2 Net operating income (loss) Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Variable costing net operating income (loss) Add (deduct) xed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income