Lehighton Chalk Company manufactures sidewalk chalk, which it sells online by the box at $27 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 1Year 2

Sales (in units)3,0003,000

Production (in units)3,4002,600

Production costs:

Variable manufacturing costs.$18,360$14,040

Fixed manufacturing overhead22,44022,440

Selling and administrative costs:

Variable12,00012,000

Fixed11,00011,000

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 costingEnd of Year 1End of Year 2

Finished-goods inventory$4,800$0

Retained earnings16,50030,520

Based on variable costingEnd of Year 1End of Year 2

Finished-goods inventory$2,160$0

Retained earnings13,86030,520

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