During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $61 per unit) $ 1,037,000 $ 1,647,000 Cost of goods sold (@ $35 per unit) 595,000 945,000 Gross margin 442,000 702,000 Selling and administrative expenses* 303,000 333,000 Net operating income $ 139,000 $ 369,000 * $3 per unit variable; $252,000 fixed each year. The companys $35 unit product cost is computed as follows: Direct materials $ 9 Direct labor 12 Variable manufacturing overhead 3 Fixed manufacturing overhead ($242,000 22,000 units) 11 Absorption costing unit product cost $ 35 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 22,000 Units sold 17,000 27,000 Required: Using variable costing, what is the unit product cost for both years? What is the variable costing net operating income in Year 1 and in Year 2? Reconcile the absorption costing and the variable costing net operating income figures for each year.