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 (@ $63 per unit) Cost of goods sold (@ $34 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 Year 2 $ 1,134,000 $ 1,764,000 612,000 952,000 522,000 812,000 309,000 339,000 $ 213,000 $ 473,000 * $3 per unit variable; $255,000 fixed each year. The company's $34 unit product cost is computed as follows: $ Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($322,000 = 23,000 units) Absorption costing unit product cost 7 10 3 14 $ 34 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