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 2 Inventories Year 1 Year 3 Beginning (units) Ending (units) 220 160 160 190 Variable costing net operating income $ 300,000 $ 269,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. O Increase O Decrease 190 230 $ 260,000 Exercise 7-3 (Algo) Part 2 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 $280,000. 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, 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 2 Inventories Year 1 Year 3 Beginning (units) Ending (units) 220 160 160 190 Variable costing net operating income $ 300,000 $ 269,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. O Increase O Decrease 190 230 $ 260,000 Exercise 7-3 (Algo) Part 2 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 $280,000. 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
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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 to shareholders,
creditors, and the government. The company has provided the following data:
Year 2
Year 1
Inventories
Beginning (units)
Ending (units)
160
190
Variable costing net operating income
$ 269,000
The company's fixed manufacturing overhead per unit was constant at $560 for all three years
O Increase
O Decrease
Year 3
220
160
$ 300,000
199
230
$ 260,000
Exercise 7-3 (Algo) Part 2
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 $280,000.
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?
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