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: Year 1 Year 2 Year 3 Inventories: Beginning (units) 211 164 190 Ending (units) 164 190 225 Variable costing net operating $293,900 $251.900 income $274,900 The company's fixed manufacturing overhead per unit was constant at $566 for all three years. Exercise 6-3 Part 1 Required: 1. Determine each year's absorption costing net operating income. Reconciliation of Variable Costing and Absorption Costing Net Operating Incoties Year 2 Year 3 Year 1 Variable costing net operating income Add (deduct) foxed manufacturing overhead deferred in (released from inventory under absorption costing Absorption costing net operating income 2. In Year 4, the company's variable costing net operating income was $257,400 and its absorption costing net operating income was $265,800. a. Did inventories increase or decrease during Year 4? O Increase Decrease b. How much fixed manufacturing overhead cost was deferred in or released from Inventory during Year 4? Fund manufacturing overhead out ventory during Year Required: 1. Determine each year's absorption costing net operating income. Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income $ 0 $ 0 $ 0 2. In Year 4, the company's variable costing net operating income was $257,400 and its absorption costing net operating income was $265,800. a. Did inventories increase or decrease during Year 4? O Decrease Increase b. How much fixed manufacturing overhead cost was deferred in or released from inventory during Year 4? Fixed manutacturing overhead cost Inventory during Year 4