Question

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)	210	150	190
Ending (units)	150	190	240
Variable costing net operating income	$300,000	$269,000	$250,000

The company’s fixed manufacturing overhead per unit was constant at $500 for all three years.

rev: 03_09_2019_QC_CS-162392

Required:

1. Calculate each year’s absorption costing net operating income. (Enter any losses or deductions as a negative value.)

Answer 1