$ Sales (@ $64 per unit) Cost of goods sold (@ $41 per unit) Gross margin Selling and administrative expenses* Net operating income Year i 960,000 615,000 345,000 299,000 146,000 Year 2 $ 1,600,000 1,025,000 575,000 329,000 $ 246,000 $ *$3 per unit variable; $254,000 fixed each year. The company's $41 unit product cost is computed as follows: $ 6 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($380,000 + 20,000 units) Absorption costing unit product cost Forty percent of fixed manufacturing overhead consists of wages and salaries; the remainder consists of depreciation charges on production equipment and buildings. Production and cost data for the first two years of operatons are: Units produced Units sold Year 1 20,000 15,000 Year 2 20,000 25,000 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