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) 210 160 200 Ending (units) 160 200 220 Variable costing net operating income $300,000 $269,000 $250,000 The company’s fixed manufacturing overhead per unit was constant at $500 for all three years. 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 $290,000. 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?
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) 210 160 200 Ending (units) 160 200 220 Variable costing net operating income $300,000 $269,000 $250,000 The company’s fixed manufacturing overhead per unit was constant at $500 for all three years. 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 $290,000. 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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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) | 210 | 160 | 200 |
| Ending (units) | 160 | 200 | 220 |
| Variable costing net operating income | $300,000 | $269,000 | $250,000 |
The company’s fixed manufacturing
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 $290,000.
a. Did inventories increase or decrease during Year 4?
b. How much fixed
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