(Answered) Question jorgansen lighting inc manufactures heavy-duty

Accounting

Question: 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) 200 151 182

Ending (units) 151 182 227

Variable costing net operating income $294,600 $272,000 $258,400

The company's fixed manufacturing overhead per unit was constant at $565 for all three years.

Determine each year's absorption costing net operating income.

In Year 4, the company's variable costing net operating income was $259,400 and its absorption costing net operating income was $273,900.

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?

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