During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows:
* $3 per unit variable; $251,000 fixed each year.
The companys $31 unit product cost is computed as follows:
Production and cost data for the first two years of operations are:
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.
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