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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)	200	170	180
Ending (units)	170	180	220
Variable costing net operating income	$1,080,400	$1,032,400	$996,400

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

3.

Required:

1. Determine each years absorption costing net operating income.4

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

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