Check my work Use the following information to answer questions 42-44 [The following information applies to the questions displayed below.] 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: Year 1 Year 2 Sales (in units) 2,400 2,400 Production (in unita) 3,000 1,800 Production costs Variable manufacturing costa $11,100 $ 6,660 Fixed manufacturing overhead 14,100 14,100 Selling and administrative costs Variable 9,600 9,600 Fixed 8,600 8,600 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 conting End of Year 1 Tinished-goods inventory $5,040 Retained earnings 8,940 Based on variable conting End of Year 1 Finished-goods inventory $2,220 Retained earnings 6,120 End of Year 2 $ 0 15,040 End of Year 2 $ 0 15,040 cm Prev 2 3 of 3 Next > Required 1 Required 2 Required 3 Prepare operating income statements for both years based on variable costing. Year 2 52,800 $ LEHIGHTON CHALK COMPANY Income Statement Year 1 Sales revenue $ 52,800 Cost of goods sold: Beginning finished-goods inventory $ Cost of goods manufactured 0 x Cost of goods available for sale Ending finished-goods inventory $ 2,220 Cost of goods sold 0 X $ > $ 0 $ 2,220 0 X SI $ $ $ LA 2,220 0 0 x $ $ 0 $ 0 52,800 52,800 Total variable costs: Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses $ 14,100 8,600 14,100 8,600 AAA AAAA Prev ONE 1 2 3 of 3 Nout Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 *** Prepare a numerical reconciliation of the difference in income reported under the two costing methods used in requirements 1 and 2 Difference Absorption Actual minus in Year fixed. Change in Inventory variable- overhead fixed (in units) overhead costing rate operating expensed Income increase 2 decrease 1 X