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 Sales (in units) Production (in units) Production costs: Year 1 3,200 3,600 Year 2 3,200 2,800 Variable manufacturing costs Fixed manufacturing overhead $16,200 $12,600 19,800 19,800 Selling and administrative costs: Variable Fixed 12,800 11,800 12,800 11,800 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 End of Year 2 Based on absorption costing Finish Retained earnings End of Year 1 11,500 End of Year 1 ed-goods inventory $4,000 21,400 Based on variable costing Finished-goods inventory End of Year 2 $ 1,800