Required i [The following information applies to the questions displayed below.

Question

Required i [The following information applies to the questions displayed below. Jorgansen Lighting, Inc. manuf costing for internal management reports and absorption costing for external reports to shareholders, creditors, and the government. The company has provided the following data: for municipalities. The company uses variable 190 230 $290,000$279,800$260,0ee 21e 150 1se 190 Ending (units) The company's fixed manufacturing overhead per unit was constant at $560 for all three years 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Re of and Variable costing net Prey 3 4 of 8 Next >

Explanation / Answer

Reconciliation Statement: Year -1 Year-2 Year-3 Income as per Variable costing 290000 279000 260000 Add/ (Less): Fixed Overheads deferred /(released) -33600 22400 22400 Net Income under Absorption costing 256400 301400 282400 Note: with the decrease in level of invenotry, fixed OH are released resulting in decrease in income under Absorption costing With the inccrease in level of ending inventory, fixed OH are defferred resulting in the increase in net income under Absorption costing. Beginning Ending Inv. Increase /(Decrease In inv. Level) Fixed OH per unit Increase/(Decrease in income under Absorption Year 1 210 150 -60 560 -33600 Year 2 150 190 40 560 22400 Year 3 190 230 40 560 22400

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