Sales (@ $62 per unit) $ 1,240,000 $ 1,860,000 Cost of goods sold (@ $39 per unit) 780,000 1,170,000 Gross margin 460,000 690,000 Selling and administrative expenses* 311,000 341,000 Net operating income $ 149,000 $ 349,000 * $3 per unit variable; $251,000 fixed each year. The companys $39 unit product cost is computed as follows: Direct materials $ 10 Direct labor 13 Variable manufacturing overhead 4 Fixed manufacturing overhead ($300,000 25,000 units) 12 Absorption costing unit product cost $ 39 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 figures for each year.