Required information [The following information applies to the questions display

Question

Required information [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) Ending (units) 210 160 $290,000 160 200 $269,000 200 240 $250,000 Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $560 for all three years Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income

Explanation / Answer

1) Calculate each year's absorption costing net operating income :

Year 1 Year 2 Year 3 Variable costing net operating income 290000 269000 250000 Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing (28000) 22400 22400 Absorption costing net operating income 262000 291400 272400

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