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 $ 1,140,000 722,000 Year 2 $ 1,740,000 1,102,000 638,000 Sales ($60 per unit) Cost of goods sold ( $38 per unit) Gross margin Selling and administrative expenses* 418,000 311.000 341,000 \107,000V 297,000 Net operating income $3 per unit variable; $254,000 fixed each year. The company's $38 unit product cost is computed as follows: Direct materials 7 Direct labor 11 Variable manufacturing overhead Fixed manufacturing overhead ($408,000 24, 000 units) 3 17 $ 38 Absorption costing unit product cost 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 first two years of operations are: Year 1 Year 2 Units produced Units sold 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. Required 1 Required 2 Required 3 Using variable costing, what is the unit product cost for both years? Unit product cost Required 1 Required 2 Complete this question by entering your answers in the tabs below. Required 3 Required 1 Required 2 What is the variable costing net operating income in Year 1 and in Year 2? (Loss amounts should be indicated with a minus sign.) Year 1 Year 2 Net operating income (loss) 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 figures for each year. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Variable costing net operating inccome (loss) Absorption costing net operating income Required 2 Required 3