exercise 6-3 reconcilistion of absorption and variable costing net operating incomes

Jorgansen Lighting, Incorporated, 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: The company's fixed manufacturing overhead per unit was constant at $550 for all three years. Exercise 6-3 (Algo) Part 2 2. Assume in Year 4 that the company's variable costing net operating income was $240,000 and its absorption costing net operating ricome was $280,000. a. Did inventories increase or decrease during Year 4 ? Increase Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4