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 219 164 188 164 188 228 $296,300 $277,800 $257,900 The company's fixed manufacturing overhead per unit was constant at $550 for all three years. Required: 1. Determine each year's absorption costing net operating income. 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 2. In Year 4, the company's variable costing net operating income was $243,300 and its absorption costing net operating income was $273,000. a. Did inventories increase or decrease during Year 4? Decrease Increase b. How much fixed manufacturing overhead cost was deferred in 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) Ending (units) Variable costing net operating income 219 164 188 164 188 228 $296,300 $277,800 $257,900 The company's fixed manufacturing overhead per unit was constant at $550 for all three years. Required: 1. Determine each year's absorption costing net operating income. 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 2. In Year 4, the company's variable costing net operating income was $243,300 and its absorption costing net operating income was $273,000. a. Did inventories increase or decrease during Year 4? Decrease Increase b. How much fixed manufacturing overhead cost was deferred in or released from inventory during Year 4?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Solve this attachment.
Transcribed Image Text: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
219
164
188
164
188
228
$296,300
$277,800
$257,900
The company's fixed manufacturing overhead per unit was constant at $550 for all three years.
Required:
1. Determine each year's absorption costing net operating income.
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
2. In Year 4, the company's variable costing net operating income was $243,300 and its absorption costing
net operating income was $273,000.
a. Did inventories increase or decrease during Year 4?
Decrease
Increase
b. How much fixed manufacturing overhead cost was deferred in or released from inventory during Year
4?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education