During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows Year 1 Year 2 Sales (e $62 per unit) Cost of goods sold ( $37 per unit) Gross margin Selling and administrative expenses* Net operating income $ 1,736,000 666,000 1,036,000 700,000 332,000 1148,000 368,000 $ 1,116,000 450,000 302,000 $3 per unit variable; $248,000 fixed each year The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($391,000 23,000 units) Absorption costing unit product cost 10 17 $ 37 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 Year 2 23,000 23,000 18,000 28,000 Using variable costing, what is the unit product cost for both years? Unit product cost What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) Reconcile the absorption costing and the variable costing net operating income figures for each year. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income(loss) Absorption costing net operating income