During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Soles (@$62 per unit) Cost of goods sold (@$43 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,116,000 774,000 342,000 300,000 $ 42,000 Year 2 $ 1,736,000 1,204,000 532,000 330,000 $ 202,000 *$3 per unit variable: $246.000 fixed each year. The company's $43 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($437,000 + 23,000 units) Absorption costing unit product cost $ 7 12 5 19 $ 43 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23,880 18,000 Year 2 23,000 28,000 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