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Jorgansen Lighting, Inc., 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)	203	152	196
Ending (units)	152	196	225
Variable costing net operating income	$293,100	$273,200	$256,600

The companys fixed manufacturing overhead per unit was constant at $561 for all three years.

6.

value: 12.50 points

Required information

Required:

1. Determine each years absorption costing net operating income.

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7.

value: 12.50 points

Required information

2. In Year 4, the companys variable costing net operating income was $255,600 and its absorption costing net operating income was $274,200.

a. Did inventories increase or decrease during Year 4?

	Increase
	Decrease

b. How much fixed manufacturing overhead cost was deferred in or released from inventory during Year 4?