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 (@ $42 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 Year 2 $ 915,000 $1,525,000 630,000 1,050,000 285,000 475,000 295,000 325,000 $ -10,000 $ 150,000 $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 ($400,000 + 20,000 units) Absorption costing unit product cost $ 10 8 4 20 $ 42 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