During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ( $63 per unit) Cost of goods sold ( $35 per unit) Gross margin Selling and administrative expenses $ 1,260,000 700,000 $ 1,890,000 1,050,000 840,000 338,000 560,000 308,000 $ \252,000\ $ 502,000 Net operating income *$3 per unit variable; $248,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials 5 Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($350,000 25,000 units 12 4 14 Absorption costing unit product cost 35 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: Year 1 Year 2 25,000 30,000 Units produced Units sold 25,000 20,000 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 25,000 20,000 25,000 30,000 Units sold 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. Complete this question by entering your answers in the tabs below. Required 2 Required 1 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required 1 Required 2