Question

Required information [The following information applies to the questions displayed below.) Part 1 of 2 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: 14 oints Skipped Year 1 Year 2 Year 3 Inventories Beginning (units) Ending (units) Variable costing net operating income 160 200 160 $290,000 200 $269,000 200 230 $250,000 eBook The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Hint Print Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) References Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income Add (deduct) foxed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income

Answer 1

ANSWER recociliation of variable costing and absorption costing net operating incomes year1 year2 year3 variable costing net operating income 2,90,000 2,69,000 250000 add or deduct fixed mfg overhead differed or (released from ) inventory under absorption costing -22400 22400 16800 net operating income absorption costing 2,67,600 2,91,400 2,66,800

200 explanation year1 beginning inventory(units) ending inventoty (units) difference in units -ending-beginning fixed manufacturing overhead cost per unit year2 200 160 -40 year 3 160 200 40 230 30 560 560 560 fixed manufacturing OH dirrered (released from)inventory= (difference units*fixed mfg OH per unit) -22400 22400 16800