The company's $$39$ unit product cost is computed as follows:

Production and cost data for the first two years of operations are:

Required:

Using variable costing, what is the unit product cost for both years?

What is the variable costing net operating income in Year $1$ and in Year $2?$

Reconcile the absorption costing and the variable costing net operating income figures for each year.

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What is the variable costing net operating income in Year $1$ and in Year $2?$

Note: Loss amounts should be indicated with a minus sign.

Net operating income $($loss$)$During Heaton Company$$s first two years of operations, it reported absorption costing net operating income as follows:

Year $1$ Year $2$

Sales $($@ $$63$ per unit$)$ $ $1,134,000$ $ $1,764,000$

Cost of goods sold $($@ $$39$ per unit$)702,0001,092,000$

Gross margin $432,000672,000$

Selling and administrative expenses$*307,000337,000$

Net operating income $ $125,000$ $ $335,000$

$*$ $$3$ per unit variable; $$253,000$ fixed each year.

The company$$s $$39$ unit product cost is computed as follows:

Direct materials $ $8$

Direct labor $9$

Variable manufacturing overhead $3$

Fixed manufacturing overhead $($$$437,000-$: $23,000$ units$)19$

Absorption costing unit product cost $ $39$

Production and cost data for the first two years of operations are:

Year $1$ Year $2$

Units produced $23,00023,000$

Units sold $18,00028,000$

Required:

Using variable costing, what is the unit product cost for both years?

What is the variable costing net operating income in Year $1$ and in Year $2?$

Reconcile the absorption costing and the variable costing net operating income figures for each year.