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Jorgansen Lighting, Incorporated, 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, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for external reports to sharesholders, creditors, and the government. The company has provided the following data below
- Calculate each year's absorption costing net operating income
- 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
2a. Did inventories increase or decrease during Year 4
2b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4
Inventories Beginning (units) Ending (units) Variable costing net operating income 210150$300,000150180$279,000180220$260,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years
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