Question

The following information applies to the questions displayed below.) Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: Year 1 Year 2 Year 3 Inventories: Beginning (units) Ending (units) Variable costing net operating income 202 164 $300,000 164 188 188 233 $277,700 $258,400 The company's fixed manufacturing overhead per unit was constant at $555 for all three years. 3. value: 2.00 points Required information Required: 1. Determine each year's absorption costing net operating income. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Hints References eBook & Resources Hint #1 Check my work 4. value: 1.00 points Required information 2. In Year 4, the company's variable costing net operating income was $244,700 and its absorption costing net operating income was $271,300. a. Did inventories increase or decrease during Year 4? Decrease Increase b. How much fixed manufacturing overhead cost was deferred in or released from inventory during Year 4? Fixed manufacturing overhead cost deferred in inventory during

Answer 1

Calculate following

	Year 1	Year 2	Year 3
variable costing net income	300000	277700	258400
Add (less) Fixed manufacturing overhead deferred in (released from) Inventory under absorption costing	-21090	13320	24975
Absorption costing net income	278910	291020	283375

B) Inventory increases

Fixed manufacturing overhead cost deferred in inventory during year 4 (271300-244700) = 26600