Toblem 6-19 (Static) Variable Costing Income Statement; Reconciliation (LO6-1, 6-2, L06-3) During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales ( $25 per unit) Cost of goods sold ($18 per unit) Gross margin Selling and administrative expenses Net operating income Year 1 $ 1,000,000 720,000 280,000 210,000 $ 70,000 Year 2 $ 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: $ 7 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($270,000+ 45,000 units) Absorption costing unit product cost 6 $ 18 Production and cost data for the first two years of operations are: Units produced Units sold Year1 45,000 40,000 Year 2 45,000 50,000 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. Prov 1 of 2 !!! Next >