Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO7-3] [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 2 Inventories Exercise 7-3 (Algo) Part 1 Year 1 Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $550 for all three years. 200 150 $ 300,000 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income 150 190 $ 269,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 190 220 $ 250,000
Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating Incomes [LO7-3] [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 2 Inventories Exercise 7-3 (Algo) Part 1 Year 1 Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $550 for all three years. 200 150 $ 300,000 Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income 150 190 $ 269,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 1 Year 2 Year 3 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 190 220 $ 250,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 21E: Bounce Back Insurance Company carries three major lines of insurance: auto, workers compensation,...
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![2. Assume in Year 4 that the company's variable costing net operating income was $250,000 and its absorption costing net
operating income was $300,000.
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?
Fixed manufacturing overhead cost
inventory during Year 4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6b32252-e9a5-4c31-a95e-2327d661064a%2F9dbb8bcf-dea1-43b8-9f72-ea68e46425f1%2Fvep7c5r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Assume in Year 4 that the company's variable costing net operating income was $250,000 and its absorption costing net
operating income was $300,000.
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?
Fixed manufacturing overhead cost
inventory during Year 4
![!
Required information
Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating
Incomes [LO7-3]
[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:
Inventories
Exercise 7-3 (Algo) Part 1
Year 1
Beginning (units)
Ending (units)
150
190
Variable costing net operating income
$ 269,000
The company's fixed manufacturing overhead per unit was constant at $550 for all three years.
Year 2
200
150
$ 300,000
Variable costing net operating income
Add (deduct) fixed manufacturing overhead deferred
in (released from) inventory under absorption costing
Absorption costing net operating income
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Year 1
Year 2
Year 3
Required:
1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.)
Year 3
190
220
$ 250,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe6b32252-e9a5-4c31-a95e-2327d661064a%2F9dbb8bcf-dea1-43b8-9f72-ea68e46425f1%2Fhkzyjuz_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
Required information
Exercise 7-3 (Algo) Reconciliation of Absorption and Variable Costing Net Operating
Incomes [LO7-3]
[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:
Inventories
Exercise 7-3 (Algo) Part 1
Year 1
Beginning (units)
Ending (units)
150
190
Variable costing net operating income
$ 269,000
The company's fixed manufacturing overhead per unit was constant at $550 for all three years.
Year 2
200
150
$ 300,000
Variable costing net operating income
Add (deduct) fixed manufacturing overhead deferred
in (released from) inventory under absorption costing
Absorption costing net operating income
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Year 1
Year 2
Year 3
Required:
1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.)
Year 3
190
220
$ 250,000
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