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 Year 2 Year 3 Inventories Beginning (units) 210 160 190 Ending (units) 160 190 230 Variable costing net operating income $ 300,000 $ 269,000 $ 260,000 The company’s fixed manufacturing overhead per unit was constant at $560 for all three years. 2. Assume in Year 4 the company’s variable costing net operating income was $250,000 and its absorption costing net operating income was $310,000. Did inventories increase or decrease during Year 4? 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. The company provided the following data: Year 1 Year 2 Year 3 Inventories Beginning (units) 210 160 190 Ending (units) 160 190 230 Variable costing net operating income $ 300,000 $ 269,000 $ 260,000 The company’s fixed manufacturing overhead per unit was constant at $560 for all three years. 2. Assume in Year 4 the company’s variable costing net operating income was $250,000 and its absorption costing net operating income was $310,000. Did inventories increase or decrease during Year 4? How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
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Chapter2: Basic Managerial Accounting Concepts
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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. The company provided the following data:
| Year 1 | Year 2 | Year 3 | |
|---|---|---|---|
| Inventories | |||
| Beginning (units) | 210 | 160 | 190 |
| Ending (units) | 160 | 190 | 230 |
| Variable costing net operating income | $ 300,000 | $ 269,000 | $ 260,000 |
The company’s fixed manufacturing overhead per unit was constant at $560 for all three years.
2. Assume in Year 4 the company’s variable costing net operating income was $250,000 and its absorption costing net operating income was $310,000.
- Did inventories increase or decrease during Year 4?
- How much fixed
manufacturing overhead cost was deferred or released from inventory during Year 4?
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