3 & 4 duby street lighting systems g for external reports to sherehoklers, credh

Question

3 & 4

duby street lighting systems g for external reports to sherehoklers, credhors, and the gaovenment The company has provided the following Jorgansen Ughting, Ine, manufectures heavy duty street lighting systems for muricipaities. The company uses variable casting for internal management reports and abscrption costn ansen Beginning (uns) Ending (units) 196 225 $291,600 $275,800 $254,100 169 196 Vaniable costing net operating income The company's fixed menufacturing overheed per unit was constant at $552 for all three years t$552 for all Required 1.00 points Rquireiyears 1. Determine eath year's absorption costing net operatinga income. Vanable cosing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) nventory under absorption costing Absorption costing net operatng Hints References eBook & Resources Check my work Required 0.50 points company's variabla costing net operating income was $250,600 and its absorpton cosing net operating incorme was $268,000 operatng ncome 2. In Year 4, the c a. Did inventories increase or decrease during Year 4? Decroase Incraase b How much flxed manufacturing averhead cost was daferred in or released from inventory during Year 47

Explanation / Answer

1.

$93, 288

Variable costing net operating income

(+) changes in Fixed overhead

$291,600

$(20,424)

$275,800

$14,904

$254,100

$16,008

2.

Since Absorption costing net operating income was greater than variable costing net operating income in year 4. Therefore, inventory increased during the year. The amount of the deferral is the difference between the two net operating incomes.

Fixed manufacturing overhead = $266,000-$250,600

= $15,400

Particular Year 1 Year 2 Year 3 Beginning Inventory 206 169 196 Ending Inventory 169 196 225 Change In inventory (37) 27 29 Fixed manufacturing overhead(Beginning) @$552 $113,712

$93, 288

$108,192 Fixed manufacturing overhead( closing) @$552 $93,288 $108,192 $124,200 Changes in Fixed cost $(20,424) $14,904 $16,008

Variable costing net operating income

(+) changes in Fixed overhead

$291,600

$(20,424)

$275,800

$14,904

$254,100

$16,008

Absorption costing net operating income $271,176 $290,704 $270,108

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