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m 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
m 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 Inventories Beginning (units) 210 160 180 Ending (units) 160 180 230 Variable costing net operating income $ 290,000 $ 269,000 $ 250,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Exercise 6-3 (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 Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income Add (deduct) fixed manufacturing overhead doforred in released from) inventory under absorption costing Absorption costing net operating income 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) 210 160 180 Ending (units) 160 180 230 Variable costing net operating income $ 290,000 $ 269,000 $ 250,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years, Exercise 6-3 (Algo) Part 2 2. Assume in Year 4 that the company's variable costing net operating income was $250,000 and its absorption costing net operating income was $290,000 a. Did Inventories increase or decrease during Year 4? Increase O Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Food manufacturing overhead cost inventory dung Year 4
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