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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 Year 1 Year 2 Sales ( $63 per unit) Cost of goods sold ( $40 per unit) Gross margin Selling and administrative expenses* Net operating incomee $ 1,197,000 1,827,000 1,160,000 667,000 335,000 $1132,000 332,000 760,000 lbu0 437,000 305,000 * $3 per unit variable; $248,000 fixed each year. The company's $40 unit product cost is computed as follows Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($432,000 24,000 units) Absorption costing unit product cost $ 10 10 18 $ 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 tirst two years of operations are: Units produced Units sold Year 1 Year 2 24,000 24,000 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. Complete this question by entering your answers in the tabs below