Use the following information to answer questions 42-44

[The following information applies to the questions displayed below.]

Huron Chalk Company manufactures sidewalk chalk which it sells online by the box at $22 per unit. Huron 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 Hurons first two years of operations is as follows:

	Year 1			Year 2
Sales (in units)		3,100			3,100
Production (in units)		3,600			2,600
Production costs:
Variable manufacturing costs	$	15,840		$	11,440
Fixed manufacturing overhead		19,440			19,440
Selling and administrative expenses:
Variable		12,400			12,400
Fixed		11,400			11,400

Selected information from Hurons year-end balance sheets for its first two years of operation is as follows:

HURON CHALK COMPANY
Selected Balance Sheet Information
Based on absorption costing	End of Year 1			End of Year 2
Finished-goods inventory	$	4,900		$	0
Retained earnings*		8,520			14,440
Based on variable costing	End of Year 1			End of Year 2
Finished-goods inventory	$	2,200		$	0
Retained earnings*		5,820			14,440

*	For convenience, assume that dividends for Year 1 is $5,500 and Year 2 is $2,700. No taxes or other expenses were incurred for both the years.

Case 8-43 Analysis of Differences in Absorption-Costing and Variable-Costing Income Statements; Continuation of Preceding Case (LO 8-1, 8-4)

Required:

1.	Reconcile Hurons 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)

Use the table given below (similar to Exhibit 8-4) to answer the question.

1.	Reconcile Hurons 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)

Use the table given below (similar to Exhibit 8-4) to answer the question.

1.	Reconcile Hurons 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)

Use the table given below (similar to Exhibit 8-4) to answer the question.

1.	Reconcile Hurons 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)

Use the table given below (similar to Exhibit 8-4) to answer the question.

2.

What was Hurons 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 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, which of the following statements (is) are true? (There may be more than one correct answer.)