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 shareholders, creditors, and the government. The company has provided the following data: Year 1 Year 2 Year 3 Inventories Beginning (units) Ending (units) Variable costing net operating income 220 170 $ 300,000 170 180 $ 279,000 180 220 $ 260,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Exercise 7-3 (Algo) Part 1 Required: 1. Calculate each year's absorption costing net operating income (Enter any losses or deductions as a negative value.) Reconciliation of Variable Conting and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable conting net operating incomo 300,000 $ 279,000 $ 260,000 Add (deduct) fixed manufacturing overhead deferred 20,000 5,600 22.400 in released from) Inventory under absorption costing Absorption conting net operating income $ 284,500 $ 282,000