Question
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:
Year 1 Year 2 Year 3 Inventories Beginning (units) 210 160 180
Ending (units) 160 180 220
Variable costing net operating income $290,000 $279,000 $260,000 The companys fixed manufacturing overhead per unit was constant at $560 for all three years.
Required: 1. Calculate each years absorption costing net operating income. (Enter any losses or deductions as a negative value.)
A) variable costing net operating income for each year.
B) Add (deduct) fixed manufacturing overhead deferred (in released form) inventory under absorbed costing for each year.
C) Absorption costing net operating income for each year.
Part 2. Assume in Year 4 that the companys variable costing net operating income was $250,000 and its absorption costing net operating income was $280,000.
A) Fixed manufactoring overhead cost
B) inventory during year 4.
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