Exercise $7-3($Static$)$ Reconciliation of Absorption and Variable Costing Net Operating Incomes $[$LO$7-3]$

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$[$The following information applies to the questions displayed below.$]$

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$)200170180$

Ending $($units$)170180220$

Variable costing net operating income $ $1,080,400$ $ $1,032,400$ $ $996,400$

The company$$s fixed manufacturing overhead per unit was constant at $$560$ for all three years.

Exercise $7-3($Static$)$ Part $2$

$2.$ Assume in Year $4$ that the company$$s variable costing net operating income was $$984,400$ and its absorption costing net operating income was $$1,012,400.$

a$.$ Did inventories increase or decrease during Year $4?$

multiple choice

Increase

Decrease

b$.$ How much fixed manufacturing overhead cost was deferred or released from inventory during Year $4?$Exercise $7-3($Static$)$ Reconciliation of Absorption and Variable Costing Net Operating Incomes $[$LO$7-3]$

$[$The following information applies to the questions displayed below.$]$

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:

The company's fixed manufacturing overhead per unit was constant at $$560$ for all three years.

Exercise $7-3($Static$)$ Part $2$

Assume in Year $4$ that the company's variable costing net operating income was $$984,400$ and its absorption costing net operating

income was $$1,012,400.$

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 $4?$