EXERCISE 5-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO 5-3 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 sharcholders, creditors, and the government. The company has provided the following data: Year 2 Year 3 Year 1 Inventories 180 200 170 170 180 Beginning (units) 220 Variable costing net operating income$%1,080,400 $%1,032.400 $996,400 un The company's fixed mariufacturing overhead per unit was constant at $560 for all three years Required: 1. Determine each year's absorption costing net operating income. Present your answer in the form of a reconciliation report. 2. In Year 4, the company's variable costing net operating income was $984,400 and its absorp tion costing net operating income was $1,012,400. Did inventories increase or decrease dur- ing Year 4? How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4