During heaton company's first two years of operations, the company reported absorption costing net operating income as follows: year 1 year 2sales (@ $25 per $1,000,000 $1,250,000cost of goods sold (@ $18 per 720,000 900,000gross 280,000 350,000selling and administrative 210,000 230,000net operating 70,000 120,000$2.00 per unit variable: $130,000 fixed each yearthe company's $18 unit product cost is computed as follows: direct $4direct $7variable manufacturing $1fixed manufacturing $6absorption costing unit product $18forty 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 two years are: year 1 year 2units 45,000 45,000units 40,000 50,0001. prepare a variable costing contribution format income statement for each year.2. reconcile the absorption costing and the variable costing net operating income figures for each year.