[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 to shareholders, creditors, and the government. The company has provided the following data: Year 1 O Increase O Decrease Inventories Beginning (units) Ending (units) 190 230 Variable costing net operating income $ 250,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Year 2 220 160 $ 290,000 Fixed manufacturing overhead cost Year 3 160 190 $ 279,000 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 $290,000. 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? inventory during Year 4

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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 to shareholders, creditors,
and the government. The company has provided the following data:
Year 1
O Increase
O Decrease
Inventories
Beginning (units)
Ending (units)
220
160
190
230
Variable costing net operating income
$ 290,000
$ 250,000
The company's fixed manufacturing overhead per unit was constant at $560 for all three years.
Year 2
Fixed manufacturing overhead cost
160
190
$ 279,000
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 $290,000.
a. Did inventories increase or decrease during Year 4?
Year 3
b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
inventory during Year 4
Transcribed Image Text:[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 to shareholders, creditors, and the government. The company has provided the following data: Year 1 O Increase O Decrease Inventories Beginning (units) Ending (units) 220 160 190 230 Variable costing net operating income $ 290,000 $ 250,000 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Year 2 Fixed manufacturing overhead cost 160 190 $ 279,000 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 $290,000. a. Did inventories increase or decrease during Year 4? Year 3 b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? inventory during Year 4
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