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Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports
Jorgansen Lighting, Inc., 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: Inventories Beginning (units) Ending (units) Variable costing net operating income Year 1 Year 2 Year 3 200 170 190 170 $300,000 190 $279,000 230 $260,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Assume in Year 4 that the company's variable costing net operating income was $240,000 and its absorption costing net Derating income was $270,000. Did inventories increase or decrease during Year 4? O Increase O Decrease How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4
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