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Lehighton Chalk Company manufactures sidewalk chalk, which it sells online by the box at $25 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, 500 2,500 Production (in units) 3, 100 1, 900 Production costs: Variable manufacturing costs $15, 190 $ 9,310 Fixed manufacturing overhead 18, 290 18, 290 Selling and administrative costs: Variable 10 , 000 10, 000 Fixed 9 , 000 9 ,000 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 End of Year 1 End of Year 2 Finished-goods inventory $ 6, 480 $ 0 Retained earnings 11, 000 17, 720 Based on variable costing End of Year 1 End of Year 2 Finished-goods inventory $ 2,940 $ 0 Retained earnings 7, 460 17,720Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Reconcile Lehighton's operating income reported under absorption and variable costing, during each y: the following two amounts on each income statement: 0 Cost of goods sold 0 Fixed cost (expensed as a period expense) Cost of goods sold under absorption costing ariable manufacturing costs under variable costing Fixed manufacturing overhead as period expense under variable costi This is a numeric cell, so please Total enter numbers only. Operating income under variable costing Less: Operating income under absorption costing _ _ Difrerence in operating income 1-!- Complete this question by entering your answers in the tabs below. 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 vari Absorption costing Variable costing Complete this question by entering your answers in the tabs below. 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 Absorption costing Variable costing Complete this question by entering your answers in the tabs below. 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 a under variable costing? Absorption costing Variable costing Complete this question by entering your answers in the tabs below. 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 acrc [requirement (3)]: (a) under absorption costing and (h) under variable costing. Absorption costing Variable costing Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Considering the results obtained in requirements 1-5 above, select which of the following statements (is) are true by selecting an "X". Sales revenue is different depending on the costing method used. Timing is the key in distinguishing between absorption and variable costing. Since Lehighton's combined operating income, across the two-year period, is the same under both absorption and variable costing, then the operating income must be the same within each year under both methods. The difference between absorption and varible costing is caused by the timing with which expenses are recognized. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare operating income statements for both years based on absorption costing. Sales revenue Cost of goods sold: Beginning nished-goods inventory Cost of goods manufactured Cost of goods available for sale Ending nished-goods inventory Cost of goods sold Gross margin Selling and administrative expenses Operating income Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare operating income statements for both years based on variable costing. LEHIGHTON CHALK COMPANY Income Statement Year 1 Year 2 Sales revenue Cost of goods sold: Beginning finished-goods inventory Cost of goods manufactured Cost of goods available for sale $ 0 $ 0 Ending finished-goods inventory Cost of goods sold Variable selling and administrative costs Total variable costs: 0 0 Contribution margin $ 0 $ OComplete 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 (1) and (2). decrease -__