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 (@$35 per unit) Gross margin Selling and administrative expenses* Net operating income *$3 per unit variable; $254,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($320,000 20,000 units) Absorption costing unit product cost 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? $7 9 3 16 $35 Year 1 $ 945,000 525,000 420,000 299,000 $ 121,000 Year 2 $ 1,575,000 875,000 700,000 329,000 $ 371,000

During Heaton Company's first two years of operations, it reported absorption costing net operating income as foll - \$3 per unit variable, \$254,000 fixed each year. The company's \$35 unit product cost is computed as follows: Production and cost data for the first two years of operations are: 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