Required informationExercise 7-3 Reconciliation of Absorption and Variable Costing Net Operating Incomes (LO7-3][The following information applies to the questions displayed below.]Jorgansen Lighting, Inc., manufactures heavy-duty street lighting systems for municipalities. The company uses variablecosting for internal management reports and absorption costing for external reports to shareholders, creditors, and thegovernment. The company has provided the following data:Year 1Year 2Year 3InventoriesBeginning (units)Ending (units)Variable costing net operating income200160200210160230$290,000$269,000$250,000The company's fixed manufacturing overhead per unit was constant at $500 for all three years. Exercise 7-3 Part 1Required:1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a rkagative value.)Reconciliation of Variable Costing and Absorption Costing Net Operating IncomesYear 1Year 2Year 3Variable costing net operating incomeAdd (deduct) fixed manufacturing overhead deferredin (released from) inventory under absorption costingAbsorption costing net operating income

Net operating income under absorption costing = Net operating income under variable costing +…

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) Ending (units) Variable costing net operating income 200 230 $250,000 160 200 210 160 $290,000 $269,000 The company's fixed manufacturing overhead per unit was constant at $500 for all three years.

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) Ending (units) Variable costing net operating income 200 230 $250,000 160 200 210 160 $290,000 $269,000 The company's fixed manufacturing overhead per unit was constant at $500 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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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) 220 160 180 Ending (units) 160 180 240 Variable costing net operating income $ 290,000 $ 269,000 $ 250,000 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. (Enter any losses or deductions as a negative value.)
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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 Year 3 Inventories Beginning (units) 210 150 190 Ending (units) 150 190 230 Variable costing net operating income $ 290,000 $ 269,000 $ 260,000 The company's fixed manufacturing overhead per unit was constant at $550 for all three years. 2. Assume in Year 4 the company's variable costing net operating income was $250,000 and its absorption costing net operating income was $300,000. Did inventories increase or decrease during Year 4? How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4 ?
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