During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ($64 per unit) Cost of goods sold ( $33 per unit) Gross margin Selling and administrative expenses 1,856,000 957,000 899,000 1,216,000 627,000 589,000 307,000 337,000 $ \282,000\ Net operating income 562,000 $3 per unit variable; $250,000 fixed each year. The company's $33 unit product cost is computed as follows: Direct materials Direct labor 11 Variable manufacturing overhead Fixed manufacturing overhead ($264,000 24,000 units) 11 33 Absorption costing unit product cost 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: Year 1 Year 2 Units produced Units sold 24,000 19,000 24,000 29,000 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