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During Heaton Company's first two years of operations, it reported absorption costing net operating income...

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During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Sales (@ $62 per unit) Cost of goods sold (@ $37 per unit) Gross margin Selling and administrative expenses* Net operating income Year 1 $ 1,054,000 629,000 425,000 303,000 $ 122,000 Year 2 $ 1,674,000 999,000 675,000 333,000 $ 342,000 *$3 per unit variable; $252,000 fixed each year. The company's $37 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($352,000 = 22,000 units) Absorption costing unit product cost $ 8 10 3 16 $ 37 Production and cost data for the first two years of operations are: Units produced Units sold Year 1 22,000 17,000 Year 2 22,000 27,000 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

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