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:

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. Did inventories increase or decrease during Year 4?

b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?

Required information The following information applies to the questions displayed below. 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) Ending (units) 190 220 $290,000 279,000 $250,000 220 160 160 190 Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years Required 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) 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