Required Information [The following information applies to the questions displayed below.) Lehighton Chalk Company manufactures sidewalk chalk, which it sells online by the box at $26 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 2,780 3,180 Year 2 2,700 2,300 Sales (in units) Production (in units) Production costs: Variable manufacturing costs Fixed manufacturing overhead Selling and administrative costs: Variable Fixed $15,819 18,91% $11,730 18,910 10,880 9,800 19,800 9,800 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 $ 4,480 Retained earnings 13,860 End of Year 2 25,640 End of Year 2 Based on variable costing Finished-goods inventory Retained earnings End of Year i $ 2,840 11,420 25,640 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