Question: Required information Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO7-3] Skip to question [The following information applies to the questions

Required information

Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO7-3]

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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) 210 160 190
Ending (units) 160 190 240
Variable costing net operating income $ 300,000 $ 279,000 $ 250,000

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

Exercise 7-3 (Algo) Part 1

Required:

1. Calculate each years absorption costing net operating income. (Enter any losses or deductions as a negative value.)

Required information Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Year 1

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