During Heaton Company's first two years of operations, the company reported absorption costing net operating income as follows ear 1 Year 2 Sales (@ $62 per unit) Cost of goods sold (@ $45 per unit) $ 930,000 $1,550,000 675,000 1,125,000 Gross margin Selling and administrative expenses* 255,000 299,000 425,000 329,000 Net operating income S (44,000) $ 96,000 $3 per unit variable; $254,000 fixed each year. The company's $45 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($380,000 20,000 units) 5 19 Absorption costing unit product cost $ 45 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 two years are Units produced Units sold ear 1 20,000 15,000 Year 2 20,000 25,000 Required 1. Prepare a variable costing contribution format income statement for each year. Heaton Company Variable Costing Income Statement Year 1 Year 2 Variable expenses Total variable expenses Fixed expenses