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 Inventories 210 Beginning (units) Ending (units) 180 160 230 Variable costing net operating income $ 300,000- $ 250,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Required: Calculate each year's absorption ses Year 2 160 180 $ 269,000 Year 3
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 Inventories 210 Beginning (units) Ending (units) 180 160 230 Variable costing net operating income $ 300,000- $ 250,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Required: Calculate each year's absorption ses Year 2 160 180 $ 269,000 Year 3
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Transcribed Image Text: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
Inventories
Beginning (units)
Ending (units)
210
160
180
160
180
230
Variable costing net operating income
$ 300,000 $ 269,000
$ 250,000
The company's fixed manufacturing overhead per unit was constant at $570 for all three years.
Required:
1. Calculate each year's absorption costing net operating income.
Note: Enter any losses or deductions as a negative value.
Variable costing net operating income
Add (deduct) fixed manufacturing overhead deferred
in (released from) inventory under absorption costing
Absorption costing net operating income
Year 2
Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Year 1
$ 300,000
Year 2
Year 3
$ 269,000 $ 250,000
Year 3
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