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 in Sales (@ $68 per unit) Cost of goods sold ( $35 per unit) Gross margin Selling and administrative expenses Net operating income S 1,140,800 1,748,800 1,015,80e 725,888 335,800 s 1178,800S 39e,890 665,ee0 475,800 305,000 $3 per unit variable; $248,000 fixed each year The company's $35 unit product cost is computed as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead (3336,eee + 24,eee units) 14 S 35 Absorption costing unit product cost Forty percent of fixed manufacturing overhead consists of wages and salaries, the remainder consists of production equipment and buildings. Production and cost data for the first two years of operations are Units produced Units sold Year Year 24, eee 24,eee 19,ee8 29, ee8 Pr 1 of 2