Required information The following information applies to the questions displaye

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 ear 1 ear ear Inventories Beginning (units) Ending (units) 220 168 $290,000 160 190 $279,000 190 230 $250,000 Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $550 for all three years 2. Assume in Year 4 that the company's variable costing net operating income was $250,000 and its absorption costing net operating income was $270,000 a. Did inventories increase or decrease during Year 4? Increase Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Fixed manufacturing overhead cost inventory during Year 4

Explanation / Answer

2a) increase (because absorption costing income is more than variable costing) b) fixed manufacturing overhead cost Deferred inventory during year 4 $20,000

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