Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Part 1 Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for internal management reports and absorption costing for

Part 1

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) 200 170 180
Ending (units) 170 180 240
Variable costing net operating income $ 300,000 $ 269,000 $ 260,000

The companys fixed manufacturing overhead per unit was constant at $560 for all three years.

rev: 03_09_2019_QC_CS-162392

Required:

1. Calculate each years 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

2. Assume in Year 4 that the companys variable costing net operating income was $250,000 and its absorption costing net operating income was $300,000.

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?

Fixed manufacturing overhead cost inventory during Year 4

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Construction Contractors AICPA Audit And Accounting Guide

Authors: American Institute Of CPAs

1st Edition

0870519751, 978-0870519758

More Books

Students also viewed these Accounting questions

Question

Why We Listen?

Answered: 1 week ago