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comes EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating In IL06 3) Jorgensen Lighting, Inc, manufactures heavy-duty street lighting systems for municipalities. The
comes EXERCISE 6-3 Reconciliation of Absorption and Variable Costing Net Operating In IL06 3) Jorgensen Lighting, Inc, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and costing for external reports to shareholders, creditors, and the government. The absorption company has provided the following data: Year 1 Year 2 Year 3 Inventories: Beginning (units) ending (units) Variable costing net operating income 200 170 170 180 $1,080,400 $1,032,400 180 220 $996,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Determine each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. 2. In Year 4, 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? How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4
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