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)
217
166
193
Ending (units)
166
193
234
Variable costing net operating income
$295,000
$275,500
$259,500
The company’s fixed manufacturing overhead per unit was constant at $555 for...