During Heaton Company's rst two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $64 per unit) $ 1,280,000 $ 1,920,000 Cost of goods sold (@ $33 per unit) 660,000 990,000 Gross margin 620,000 930,000 Selling and administrative expenses* 309,000 339,000 Net operating income $ 311.000 $ 591.000 * $3 per unit variable; $249,000 xed each year. The company's $33 unit product cost is computed as follows: Direct materials $ 9 Direct labor 11 Variable manufacturing overhead 2 Fixed manufacturing overhead ($275,000 + 25,000 units) 11 Absorption costing unit product cost $ 33 ' 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 25,000 25,000 Units sold 20,000 30,000 ' 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 gures for each year. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? 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. 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