During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@$63 per unit) Cost of goods sold (@ $39 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,197,000 741,000 456,000 307,000 $ 149,000 Year 2 $ 1,827,000 1,131,000 696,000 337,000 $ 359,000 *$3 per unit variable; $250,000 fixed each year. The company's $39 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($408,000 + 24,000 units) Absorption costing unit product cost $ 6 12 4 17 $ 39 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 24,000 19,000 Year 2 24,000 29,000 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. Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required Required 2 > Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Year 2 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income