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During Heaton Companys first two years of operations, it reported absorption costing net operating income...

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Accounting

During Heaton Companys first two years of operations, it reported absorption costing net operating income as follows:
Year 1 Year 2
Sales (@ $61 per unit) $ 1,159,000 $ 1,769,000
Cost of goods sold (@ $38 per unit)722,0001,102,000
Gross margin 437,000667,000
Selling and administrative expenses*310,000340,000
Net operating income $ 127,000 $ 327,000
* $3 per unit variable; $253,000 fixed each year.
The companys $38 unit product cost is computed as follows:
Direct materials $ 7
Direct labor 12
Variable manufacturing overhead 1
Fixed manufacturing overhead ($432,000-: 24,000 units)18
Absorption costing unit product cost $ 38
Production and cost data for the first two years of operations are:
Year 1 Year 2
Units produced 24,00024,000
Units sold 19,00029,000
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.

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