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 @ $34 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 992,000 544,000 448,000 295,000 153,000 Year 2 $ 1,612,000 884,000 728,000 325,000 $ 403,000 $ * $3 per unit variable: $247,000 fixed each year. The company's $34 unit product cost is computed as follows: $ 6 9 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($357,000 = 21,000 units) Absorption costing unit product cost 17 $ 34 Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 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