mheducation.com/flow/connect.html rk, Ch 6 l Ine ronowing inormauon appues to ne

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mheducation.com/flow/connect.html rk, Ch 6 l Ine ronowing inormauon appues to ne quesuons aispiayea oelow. Jorgansen Lighting. Inc, manufactures heavy-duty street lighting systems for municipalties. The company uses variable government. The company has provided the following data: nagement reports and absorption costing for external reports to shareholders, creditors, and the tories Beginning (units) Ending (units) 150 190 $290,000$279,000 190 230 $260,000 150 The company's fixed manufacturing overhead per unit was constant at $560 for all three years. 2 Assume in Year 4 that the company's variable costing net operating income was $250000 and its absorption costing net operating Income was $280,000. a. Did inventories increase or decrease during Year 4? Increase Decrease . How much fixed manufacturing overhead cost was deferred or reteesed from inventory during Year 43 4 of 8

Explanation / Answer

2a) increase

Absorption costing profit is higher than that of variable costing. It shows that inventory increased during the period.

b)deferred, $ 30,000

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