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Exercise 4-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO4-3]

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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 to shareholders, creditors, and the government. The company has provided the following data:

	Year 1	Year 2	Year 3
Inventories
Beginning (units)	220	150	190
Ending (units)	150	190	220
Variable costing net operating income	$ 300,000	$ 269,000	$ 260,000

The companys fixed manufacturing overhead per unit was constant at $550 for all three years.

Exercise 4-3 (Algo) Part 1

Required:

1. Calculate each years absorption costing net operating income.

Note: Enter any losses or deductions as a negative value.