Exercise 6-3 Reconciliation of Absorption and Vanable Costing Net Operating Incomes ILO3 lhe following infomation applies to the questions displayed belowj High Tension Transformers, Inc., manufactures heavy-duty transformers for electrical switching stations. The company uses variable costing for internal managementreports and absorption oosting forexernal reports to shareholders, creditors, and the government The company has provided the following data: 1 Year 2 Year ear 3 Inventories Beginning (units) 210 57 Ending (units) 57 232 Variable costing netoperating income $296,700 $273,700 $253,100 The company's fxed man overhead per unit was constant at $500 for all three years 0.71 points Exercise 6-3 Part 1 Required: 1. Determine each years absorption costing net operating income. (Amounts to be deducted should be indicated with a minus sign. Omit the sign in your response) Reconciliation ofVariable Costing and Absorption Costing NetOperating Incomes Year Variable costing netoperating income Add (deduct fixed manufacturing overhead deferred in released from inventory under absorption costing Absorption costing net operating income 0.71 points Exercise 6-3 Part 2 2. in Year 4, the company's variable costing net operating income was S243,500 and its absorption costing net operating income was S203300. a. Did inventories increase or decrease during Year 4? Decreased O increased b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? (omit the sign in your response.) Fixed manufacturing overhead cost (Ciokto select inventory during Year4 s ear2 ear 3