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EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes L06-3 Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for exter- nal reports to shareholders, creditors, and the government. The company has provided the follow- ing data: Year 1 Year 2 Year 3 200 Inventories: Beginning (units) Ending (units) Variable costing net operating income 170 170 180 $1,080,400 $1.032.400 180 220 $996,400 ho The company's fixed manufacturing overhead per unit was constant at S560 for all three years. Required: 1. Calculate each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. 2. Assume in Year 4 that the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012.400. Did inventories increase or decrease during Year 4? b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? a