[The following information applies to the questions displayed below.] 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 shareholders, creditors, and the government. The company has provided the following data: Year 1Year 2Year 3Inventories Beginning (units)220170190Ending (units)170190220Variable costing net operating income$290,000$279,000$250,000 The company’s fixed manufacturing overhead per unit was constant at $400 for all three years. Required: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 Incomes Year 1Year 2Year 3Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income

Year 1 Year 2 Year 3 Ending units 170 190 220 Beginning units 220 170 190 Increase…

Answered: Jorgansen Lighting, Inc., manufactures…

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

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 shareholders, creditors, and the government. The company has provided the following data:

	Year 1	Year 2	Year 3
Inventories
Beginning (units)	220	170	190
Ending (units)	170	190	220
Variable costing net operating income	$290,000	$279,000	$250,000

The company’s fixed manufacturing overhead per unit was constant at $400 for all three years.

Required:

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 Incomes
	Year 1	Year 2	Year 3
Variable costing net operating income
Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing
Absorption costing net operating income

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