Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company uses variable costing for...
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Jorgansen Lighting, Incorporated, 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) 220 150 150 200 Variable costing net operating income $ 300,000 $ 279,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. 200 240 $ 250,000 2. Assume in Year 4 that the company's variable costing net operating income was $240,000 and its absorption costing net operating income was $290,000. a. Did inventories increase or decrease during Year 4? Increase O 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 Jorgansen Lighting, Incorporated, 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) 220 150 150 200 Variable costing net operating income $ 300,000 $ 279,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. 200 240 $ 250,000 2. Assume in Year 4 that the company's variable costing net operating income was $240,000 and its absorption costing net operating income was $290,000. a. Did inventories increase or decrease during Year 4? Increase O 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
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