Please do the Required 3

During Heaton Company's first two years of operations, it reported absorption costing net operating income as follows: Year 1 Year 2 Sales (@ $64 per unit) $ 1,280,000 $ 1,920,000 Cost of goods sold (@ $42 per unit) 840,000 1,260,000 Gross margin 440,000 660,000 Selling and administrative expenses* 313,000 343,000 Net operating income $ 127,000 $ 317,000 * $3 per unit variable; $253,000 xed each year. The company's $42 unit product cost is computed as follows: Direct materials 55 9 Direct labor 10 Variable manufacturing overhead 4 Fixed manufacturing overhead ($475,000 + 25,000 units) 19 Absorption costing unit product cost $ 42 ' Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 25,000 25,000 Units sold 20,000 30,000 ' Required: 1. Using variable costing, what is the unit product cost for both years? 2. What is the variable costing net operating income in Year1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year. 6 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Reconcile the absorption costing and the variable costing net operating income gures for each year. Variable costing net operating income (loss) $ 127,000 9 $ 317,000 9 Less: Fixed manufacturing overhead cost released from inventory under absorption costing 0 (95,000) 6 _ Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing a 32,000 a 412,000 9 Absorption costing net operating income $ 412,000 9