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Required information Exercise 6-3 (Static) Reconciliation of Absorption and Variable Costing Net Operating Incomes (L06-3) (The following information applies to the questions displayed below.) Jorgansen
Required information Exercise 6-3 (Static) Reconciliation of Absorption and Variable Costing Net Operating Incomes (L06-3) (The following information applies to the questions displayed below.) 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) 170 180 220 Variable costing net operating income $ 1,080, 408 $ 1,032,480 $ 996,400 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. tercise 6-3 (Static) Part 1 quired: 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 ariable costing net operating income $ 996,400 dd (deduct) fixed manufacturing overhead deferred 22 400 (released from) inventory under absorption costing bsorption costing net operating income $ 1.018,800 Exercise 6-3 (Static) Part 2 2. Assume in Year 4 that the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400 a. Did inventories increase or decrease during Year 4? Increase Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Food manufacturing overhead cout inventory during Your 4
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