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 Year 2?

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

$3 per unit variable; $255,000 fixed each year. The company's $30 unit product cost is computed as follows: 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 operations are