Lehighton Chalk Company manufactures sidewalk chalk, which it sells online by the box at $23 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 2,600 3,000 Year 2 2,600 2,200 Sales (in units) Production (in units) Production costs: Variable manufacturing costs Fixed manufacturing overhead Selling and administrative costs: Variable Fixed $11,700 14,700 $ 8,580 14,700 10,400 9,400 10,400 9,400 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 End of Year 1 Finished-goods inventory $ 3,520 Retained earnings 11,620 End of Year 2 $ 0 22,120 Based on variable costing Finished-goods inventory Retained earnings End of Year 1 $ 1,560 9,660 End of Year 2 $ 0 22,120 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? Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 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) Show less Year 1 Year 2 Cost of goods sold under absorption costing Variable manufacturing costs under variable costing Subtotal Fixed manufacturing overhead as period expense under variable costing Total > $ 0 $ 0 Operating income under variable costing Less: Operating income under absorption costing Difference in operating income OO 0 X $ 0 $ 0 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