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Huron Chalk Company manufactures sidewalk chalk which it sells online by the box at $24 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 overheads computed each year; actual manufacturing overhead is divided by actual production (in units) to compute the application rate. Information for Huron's first two years of operations is as follows: Sales (in units) Production (in units) Production costs: Year 1 Year 2 2,700 2,700 3,300 2,100 costs overhead expenses: Variable manufacturing $13,200 $ 8,400 Fixed manufacturing 16,500 16,500 Selling and administrative Variable Fixed 10,800 10,800 9,800 9,800 Selected information from Huron's year-end balance sheets for its first two years of operation is as follows: HURON CHALK COMPANY Selected Balance Sheet Information Based on absorption End of Year 1 End of Year 2 costing . Finished-goods inventory $5,400 0 Retained earnings 14,400 25,600 Based on variable costing End of Year 1 End of Year2 Finished-goods inventory 2,400 o Retained earnings 11,400 25,600 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

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