PROBLEM 6-19 Variable Costing Income Statement: Reconciliation (LO2. L031 During Heaton Company's first two years of operations, the company reported absorption costi net operating income as follows: Year 1 Year 2 Sales (@ $25 per unit) ........ Cost of goods sold (@ $18 per unit) ...... Gross margin .......... Selling and administrative expenses ........ Net operating income ..... $1,000,000 720,000 280,000 210,000 $ 70,000 $1,250,000 900,000 350,000 230,000 $ 120,000 $2 per unit variable: $130,000 fixed each year. The company's $18 unit product cost is computed as follows: Direct materials ......... Direct labor .................. Variable manufacturing overhead ... Fixed manufacturing overhead ($270,000+ 45,000 units). Absorption costing unit product cost ......... Forty percent of fixed manufacturing overhead consists of wages and salaries, the rema sists of depreciation charges on production equipment and buildings. Production and cost data for the two years are: Units produced .. Units sold Year 1 45,000 40,000 Year 2 45,000 50,000 Required: repare a variable costing contribution format income statement for each year. the absorption costing and the variable costing net operating income figures for each year