9 Required information Use the following information to answer questions 42-44 [The following information applies to the questions displayed below.] Part 5 of 6 0.79/1.09 points awarded Scored Lehighton Chalk Company manufactures sidewalk chalk, which it sells online by the box at $22 per unit. Lehighton uses an actual costing system, which means that the actual costs of direct material, direct labor, and manufacturing overhead are entered into work-in-process inventory. The actual application rate for manufacturing overhead is computed each year; actual manufacturing overhead is divided by actual production (in units) to compute the application rate. Information for Lehighton's first two years of operation is as follows: Sales (in units) Production (in units) Production costs: Variable manufacturing costs Fixed manufacturing overhead Selling and administrative costs: Variable Fixed Year 1 3,100 Year 2 3,100 3,600 2,600 $15,840 $11,440 19,440 19,440 12,400 11,400 12,400 11,400 Selected information from Lehighton's year-end balance sheets for its first two years of operation is as follows: LEHIGHTON CHALK COMPANY Selected Balance Sheet Information Based on absorption costing Finished-goods inventory Retained earnings Based on variable costing Finished-goods inventory Retained earnings End of Year 1 $ 4,900 8,520 End of Year 2 $ 0 14,440 End of Year 1 $2,200 5,820 End of Year 2 $ 0 14,440 Case 8-43 Analysis of Differences in Absorption-Costing and Variable-Costing Income Statements; Continuation of Preceding Case (LO 8-1, 8-6) Required: 1. Reconcile Lehighton's operating income reported under absorption and variable costing, during each year, by comparing the following two amounts on each income statement: Cost of goods sold Fixed cost (expensed as a period expense) 2. What was Lehighton's total operating income across both years under absorption costing and under variable costing? 3. What was the total sales revenue across both years under absorption costing and under variable costing? 4. What was the total of all costs expensed on the operating income statements across both years under absorption costing and under variable costing? 5. Subtract the total costs expensed across both years (requirement 4) from the total sales revenue across both years (requirement 3): (a) under absorption costing and (b) under variable costing. 6. Considering the results obtained in requirements 1-5 above, evaluate the following statements. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 What was Lehighton's total operating income across both years under absorption costing and under variable costing? Total Operating Income Absorption costing Variable costing $ 8,620 x $ 11,320 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 What was the total sales revenue across both years under absorption costing and under variable costing? Total Sales Revenue Absorption costing $ 68,200 Variable costing $ 68,200 Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 What was the total of all costs expensed on the operating income statements across both years under absorption costing and under variable costing? Costs Expensed Absorption costing $ 59,580 Variable costing $ 56,880 x Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Subtract the total costs expensed across both years (requirement 4) from the total sales revenue across both years (requirement 3): (a) under absorption costing and (b) under variable costing. Amount Absorption costing $ 14,020 > Variable costing $ 8,620