Question

Please help with this question. Thanks!

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 200 150 $290,000 150 190 $269,000 190 230 $250,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Exercise 6-3 Part 1 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) 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

Answer 1

	Year 1	Year 2	Year 3
Variable costing net operating income	290,000	269,000	250,000
+(-)fixed moh deferred(released)	--28,500	22,800	22,800
Absorption costing net operating income	261,500	291,800	272,800

Comment if you face any issues