Check my work Check My Work button is now enabled10Item 4Item 4 5 points During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $62 per unit) $ 1,178,000 $ 1,798,000 Cost of goods sold (@ $40 per unit) 760,000 1,160,000 Gross margin 418,000 638,000 Selling and administrative expenses* 307,000 337,000 Net operating income $ 111,000 $ 301,000 * $3 per unit variable; $250,000 fixed each year. The companys $40 unit product cost is computed as follows: Direct materials $ 10 Direct labor 10 Variable manufacturing overhead 1 Fixed manufacturing overhead ($456,000 24,000 units) 19 Absorption costing unit product cost $ 40 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: Year 1 Year 2 Units produced 24,000 24,000 Units sold 19,000 29,000 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.