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High Tension Transformers, Inc., manufactures heavy-duty transformers for electrical switching stations. The company uses variable costing for internal management reports and absorption costing for external reports to shareholders, creditors, and government. The company has provided the following data:
Year 1 Year 2 Year 3InventoriesBeginning Units 180 150 160Ending Units 150 160 200Variable Costingnet operatingIncome 292,400 269,200 251,800
The company's fixed manufacturing overhead per unit was constant at $450 for all three years.
1. Determine each year's absorption costing net operating income. Present your answer in the form of a reconciliation report.
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