Exercise 6-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO6-3][The following information applies to the questions displayed below.]Jorgansen Lighting, Incorporated, manufactures heavy-duty street lighting systems for municipalities. The company usesvariable costing for internal management reports and absorption costing for external reports to shareholders, creditors,and the government. The company has provided the following data:InventoriesBeginning (units)Ending (units)Variable costing net operating incomeYear 1Year 2Year 3200150150190190230$ 300,000$ 269,000$ 260,000The company's fixed manufacturing overhead per unit was constant at $570 for all three years.Exercise 6-3 (Algo) Part 1Required:1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.)Reconciliation of Variable Costing and Absorption Costing Net Operating IncomesYear 1Year 2Year 3Variable costing net operating income$ 300,000 $ 269,000 $260,000Add (deduct) fixed manufacturing overhead deferredin (released from) inventory under absorption costingAbsorption costing net operating income

Absorption costing is a method in which cost of units produced includes both the variable and fixed…

Exercise 6-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO6-3] [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: Year 1 200 150 $ 300,000 Year 3 150 190 230 190 $ 269,000 $ 260,000 Year 2 Inventories Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years.

Exercise 6-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO6-3] [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: Year 1 200 150 $ 300,000 Year 3 150 190 230 190 $ 269,000 $ 260,000 Year 2 Inventories Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required information [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. The company provided the following data: Year 1 Year 2 200 160 $ 290,000 Inventories Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Year 3 160 180 $ 269,000 180 220 $ 250,000 2. Assume in Year 4 the company's variable costing net operating income was $240,000 and its absorption costing net operating income was $300,000. a. Did inventories increase or decrease during Year 4? b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
[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) 210 160 180 Ending (units ) 160 180 230 Variable costing net operating income $300,000 $ 279,000 $ 260,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Required: 1. Calculate each year's absorption costing net operating income. Note: Enter any losses or deductions as a negative value.
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