During Heaton Company's first two years of operations,it reported absorption costing net operating income as follows Year 41lill Year2 Sales te $61 per unit) Cost of goods sold ( $36 per unit) Gross margin Selling and administrative expenses Net operating income 1,037,000 1,647,000 612,000 25,000 675,000 334,000 341,000 1121,0001 $3 per unit variable: $253,000 fixed each year. The company's $36 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (8374,000 22,000 units) Absorption costing unit produet cost 5 36 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 17,000 27,000 Prew3 of 7 Next > 2 3 5 6