Business, 25.02.2020 16:22 isaaccott013

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 company's fixed manufacturing overhead per unit was constant at $560 for all three years.

Requirement 1:
Determine each year’s absorption costing net operating income. Present your answer in the form of a reconciliation report for year 1, 2 and 3.

Year 1 Year 2 Year 3
Beginning inventories

Ending inventories

Change in inventories

Fixed manufacturing overhead in beginning inventories

Fixed manufacturing overhead in ending inventories

Fixed manufacturing overhead deferred in (released from) inventorie

Variable costing net operating income

Add (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costing

Absorption costing net operating income

Requirement 2:
In Year 4, 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?

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

Deferred or released ???
Ffixed manufacturing overhead cost $

Answers: 1

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Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The co...