I knew that Year 1's fixed manufacturing overhead is 320,000 50,000 = 6.4, then fixed manufacturing deferred in inventory: (50,000 - 40,000) 6.4 = 64,000

Why Year 2's fixed manufacturing overhead isn't 320,000 40,000 = 8, then (40,000-50,000)8 = -80,000 ?

Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 25 $ 15 $ 3 $ 2 $ 320,000 $ 80,000 Req 1A Req 1B Req 2A Req 2B Req 3 Reconcile the difference between variable costing and absorption costing net operating income in Year 1. (Enter any losses or deductions as a negative value.) Year 1 Year 2 $ (160,000) $ (100,000) Variable costing net operating income (loss) Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income (loss) 64,000 (64,000) ? $ (96,000) $ (164,000)