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.

IThe following information applies to the questions displayed below. Huron Chalk Company manufactures sldewalk chalk which it sells online by the box at $28 per unit. Huron uses an actual costing system, which means that the actual costs of direct materlal, direct labor, and manufacturing overhead are entered Into work-ln-process Inventory. The actual application rate for manufacturing overhead is computed each year. actual manufacturing overhead ls divided by actua production (in units to compute the application rate. Informatlon for Huron's first two years of operations ls as follows: Year 1 Year 2 Sales (in unlts) 3.100 3.100 Production (In unlts) 3.700 2,500 Production costs: $20,350 13,750 Variable manufacturing costs Fixed manufacturing overhead 24,790 24,790 Selling and administrative expenses: Variable 12,400 12.400 Fixed 11,400 11.400 Selected information from Huron's year-end balance sheets for its first two years of operation as follows: HURON CHALK COMPANY Selected Balance Sheet Information Based on absorption cost ng End of Year 1 nd of Year 2 7320 Finished goods Inventory Retained earnlngs 34,120 19,680 End of Year 1 nd of Year 2 Based on variable costlng 3,300 Finished goods Inventory Retained earnings 34,120 15.660 For convenlence, assume that divldends for Year 1 ls $5,500 and Year 2 ls $2,700. No taxes or other expenses were Incurred for both the years