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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: Inventories Year 1 Year 2 220 160 $ 300,000 Beginning (units) Ending (units) 160 190 Variable costing net operating income. $ 269,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Variable costing net Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 2 Year 1 Year 3 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 190 220 $ 260,000

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: Inventories Year 1 Year 2 220 160 $ 300,000 Beginning (units) Ending (units) 160 190 Variable costing net operating income. $ 269,000 The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Variable costing net Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 2 Year 1 Year 3 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 190 220 $ 260,000

FINANCIAL ACCOUNTING
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: Inventories Year 1 Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Year 2 220 160 $ 300,000 Year 1 160 190 $ 269,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 2 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 Year 3 190 220 $ 260,000
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 to shareholders, creditors, and the government. The company has provided the following data: Inventories Year 1 Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years. Variable costing net operating income Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption costing Absorption costing net operating income Year 2 220 160 $ 300,000 Year 1 160 190 $ 269,000 Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Year 2 Required: 1. Calculate each year's absorption costing net operating income. (Enter any losses or deductions as a negative value.) Year 3 Year 3 190 220 $ 260,000
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: Inventories Year 1 O Increase O Decrease Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years. 220 160 $ 300,000 Fixed manufacturing overhead cost Year 2 Year 3 160 190 $ 269,000 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 $300,000. a. Did inventories increase or decrease during Year 4? inventory during Year 4 190 220 $ 260,000 b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
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 to shareholders, creditors, and the government. The company has provided the following data: Inventories Year 1 O Increase O Decrease Beginning (units) Ending (units) Variable costing net operating income The company's fixed manufacturing overhead per unit was constant at $570 for all three years. 220 160 $ 300,000 Fixed manufacturing overhead cost Year 2 Year 3 160 190 $ 269,000 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 $300,000. a. Did inventories increase or decrease during Year 4? inventory during Year 4 190 220 $ 260,000 b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
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