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 ($40 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 945,000 600,000 345,000 295,000 50,000 Year 2 $ 1,575,000 1,000,eee 575,000 325,000 $ 250, eee - $3 per unit variable: $250,000 fixed each year, The company's $40 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($380,000 - 20,000 units) Absorption costing unit product cost $ 9 10 2 19 $40 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 28. aee 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