Problem 6-19 (Algo) Variable Costing Income Statement; Reconciliation [LO,6-1, 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 ($62 per unit) Cost of goods sold (@ $29 per unit) Gross margin Selling and administrative expenses* Net operating income * $3 per unit variable; $250,000 fixed each year. $ 1,240,000 $ 1,860,000 580,000 870,000 660,000 310,000 990,000 340,000 $ 350,000 $ 650,000 The company's $29 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($275,000 + 25,000 units) Absorption costing unit product cost $ 8 9 1 11 $ 29 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced Units sold 25,000 20,000 25,000 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 Year 1 and in Year 2? 3. Reconcile the absorption costing and the variable costing net operating income figures for each year.