During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: $ Sales (@ $62 per unit) Cost of goods sold (@ $37 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 930,000 555,000 375,000 293,000 82,000 Year 2 $ 1,550,000 925,000 625,000 323,000 $ 302,000 *$3 per unit variable: $248,000 fixed each year. The company's $37 unit product cost is computed as follows: $ 9 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($300,000 = 20,000 units) Absorption costing unit product cost 4 15 $ 37 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 20,000 15,000 Year 2 20,000 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