During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $63 per unit) $ 1,071,000 $ 1,701,000 Cost of goods sold (@ $36 per unit) 612,000 972,000 Gross margin 459,000 729,000 Selling and administrative expenses* 305,000 335,000 Net operating income $ 154,000 $ 394,000 * $3 per unit variable; $254,000 fixed each year. The companys $36 unit product cost is computed as follows: Direct materials $ 9 Direct labor 12 Variable manufacturing overhead 2 Fixed manufacturing overhead ($286,000 22,000 units) 13 Absorption costing unit product cost $ 36 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: 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