During Heaton Company's first two years of operations, it reported absorption costing net operating inco Sales (@ $62 per unit) Year 1 Year 2 Cost of goods sold (@ $33 per unit) $1,116,000 $1,736,000 Gross margin 594,000 924,000 Selling and administrative expenses* 522,000 812,000 Net operating income $305,000 335,000 $3 per unit variable; $251,000 fixed each year. The company's $33 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($299,000-:23,000 units ) Absorption costing unit product cost $6 12 2 [13],[$33] Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23,000 Units sold 18,000 28,000 Required: Using variable costin