answer 2 & 3

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales ( 561 per unit) $ 915,000 $1,525,000 cost of goods sold ( 540 per unit) 600,000 1,000,000 Gross margin 315,000 525,000 Selling and administrative expenses 290,000 320,000 Net operating income $ 25,000 $ 205,000 *$3 per unit variable: $245,000 fixed each year. The company's $40 unit product cost is computed as follows: Direct materials $6 Direct labor Variable manufacturing overhead Fixed manutacturing overhead (5380,000 - 20,000 units) 19 Absorption conting unit product cost $ 40 anal 12 3 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 20,000 20,000 Units sold 15,000 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. Required 1 Required 2 Required 3 What is the variable costing net operating income in Year 1 and in Year 27 (Loss amounts should be indicated with a minus sign.) Net operating income (loss) Year 1 555,000 $ Year 2 925,000 Required 1 Required 2 Readired 3 Reconcile the absorption costing and the variable costing net operating income figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating income (loss) $ 555,000 $ 925,000 Add (deduct) fixed manufacturing overhead deferred in (released from) Inventory under absorption costing 105,000 (105,000) Absorption costing net operating income $ 660,000 $ 820,000