Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation (LO,6-1, LO6-2, LO6-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $62 per unit) Cost of goods sold (@ $38 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,116,000 684,000 432,000 307,000 $ 125,000 Year 2 $ 1,736,000 1,064,000 672,000 337,000 $ 335,000 *$3 per unit variable; $253,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($414,000 - 23,000 units) Absorption costing unit product cost $ 6 12 2 18 $ 38 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 23,000 18,000 Year 2 23,000 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 costing net operating income figures for each year