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) 220 170 190 Ending (units) 170 190 220 Variable costing net operating income $290,000 $279,000 $250,000 The company’s fixed manufacturing overhead per unit was constant at $400 for all three years. 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 $270,000. a. Did inventories increase or decrease during Year 4? multiple choice Increase Decrease b. How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4? Fixed manufacturing overhead cost inventory during Year 4
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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) | 220 | 170 | 190 |
| Ending (units) | 170 | 190 | 220 |
| Variable costing net operating income | $290,000 | $279,000 | $250,000 |
The company’s fixed manufacturing overhead per unit was constant at $400 for all three years.
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 $270,000.
a. Did inventories increase or decrease during Year 4?
multiple choice
-
Increase
-
Decrease
b. How much fixed
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