[The following information applies to the questions displayed below.]

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)	217	166	193
Ending (units)	166	193	234
Variable costing net operating income	$295,000	$275,500	$259,500

The companys fixed manufacturing overhead per unit was constant at $555 for all three years.

3.

value: 2.00 points

Required information

Required:

1. Determine each years absorption costing net operating income.

Hints

References

eBook & Resources

Hint #1

Check my work

4.

value: 1.00 points

Required information

2. In Year 4, the companys variable costing net operating income was $248,400 and its absorption costing net operating income was $279,300.

a. Did inventories increase or decrease during Year 4?

	Decrease
	Increase

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

Hints

References

eBook & Resources

Hint #1