During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $68 per unit) Cost of goods sold (@$35 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,020,000 595,000 425,000 300,000 $ 125,000 Year 2 $ 1,620,000 945,000 675,000 330,00 $ 345,000 * $3 per unit variable: $249,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($286,008 22,000 units) Absorption costing unit product cost $ 9 8 5 13 $ 35 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 22,000 17,000 Year 2 22,800 27,000 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. 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.) 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. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Year 2 Absorption costing net operating income