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 Sale's (@ $62 per unit) $ 1, 054, 000 $ 1, 674, 000 Cost of goods sold (@ $38 per unit) 646, 000 1, 026, 000 Gross margin 408, 000 648 , 000 Selling and administrative expenses* 297, 000 327, 000 Net operating income $ 111, 000 $ 321, 000 nces * $3 per unit variable; $246,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials S Direct labor Variable manufacturing overhead Fixed manufacturing overhead ($374,000 + 22,000 units) 17 Absorption costing unit product cost $ 38 Production and cost data for the first two years of operations are: Year 1 Year 2 Units produced 22,000 22,000 Units sold 17,000 27, 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