During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ( $61 per unit) Cost of goods sold (e $42 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,220,000 840,000 380,000 310,000 70,000 Year 2 $ 1,830,000 1,260,000 570,000 340,000 $ 230,000 $3 per unit variable: $250,000 fixed each year. The company's $42 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($425,000 - 25,000 units) Absorption costing unit product cont $ 9 13 3 17 $ 42 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 25,000 20,000 Year 2 25,000 30,000 Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and In Year 27 (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 2 Variable costing net operating income (loss) Year 1 Absorption costing net operating income