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 $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, Year 2 2,600 2.2ae Sales (in units) Production (in units) Production costs: Variable manufacturing costs Fixed manufacturing overhead Selling and administrative costs: Variable Fixed $11,780 14,780 $ 8,588 14,790 19.489 9.499 18.489 9.488 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 $ 22,120 Based on variable costing Finished-goods inventory Retained earnings End of Year 1 $ 1,560 9.650 End of Year 2 $ 22.12e Required: Lehighton Chalk Company had no beginning or ending work-in-process inventories for either year. 1. Prepare operating income statements for both years based on absorption costing. 2. Prepare operating income statements for both years based on variable costing. 3. Prepare a numerical reconciliation of the difference in income reported under the two costing methods used in requirements 1 and 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. LEHIGHTON CHALK COMPANY Income Statement Year 1 Year 2 Cost of goods sold: Resuired 1 Required 2 >