Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,6-1, LO6-2, L06-3) During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ( $62 per unit) $ 1,116,000 $1,736,000 Cost of goods sold (e $34 per unit) 612,000 952,000 Gross margin 504,000 784,000 Selling and administrative expenses 308,000 338,000 Net operating income $ 196,000 $ 446,000 $3 per unit variable: $254,000 fixed each year. The company's $34 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($299,000 + 23,000 units) Absorption conting unit product cost $ 6 10 5 13 $ 34 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 23,000 23,000 Units sold 18,000 28,000 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 costina net operatina income figures for each vear