Check my work Problem 6-19 Variable Costing Income Statement; Reconciliation [LO6-2, LO6-3] During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: 15 points Year 1 Year 2 915,000 1,525,000 Sales ( $61 per unit) Cost of goods sold ( $31 per unit) Gross margin Selling and administrative expenses* Net operating income 465,000 450,000 775,000 750,000 296, 000326,000 $424,000 eBook $1154,000 Print $3 per unit variable; $251,000 fixed each year. The company's $31 unit product cost is computed as follows: References Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($240,000 20,000 units) Absorption costing unit product cost 12 $ 31 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: Units produced Units sold Year 1 Year 2 20,000 20,000 15,000 25, 000