During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $60 per unit) Cost of goods sold (@ $35 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 960,000 560,000 400,000 294,000 $ 106,000 Year 2 $ 1,560,000 910,000 650,000 324,000 $ 326,000 *$3 per unit variable: $246,000 fixed each year. The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($252,000 + 21,000 units) Absorption costing unit product cost $ 9 12 2 12 $ 35 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 21,000 16,000 Year 2 21,000 26,000 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