Sunrise Pools and Spas manufactures fibreglass forms for inground pools and swim spas for allseason use. 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 data for their swim spa business in years and shown below.
The company's fixed manufacturing overhead per unit was constant at $ for all three years:
Required:
Determine each year's absorption costing operating income. Present your answer in the form of a reconciliation report.
a In year the company's variable costing operating income was $ and its absorption costing operating income was
$ Did inventories increase or decrease during year
Increase
Decrease
b How much fixed manufacturing overhead cost was deferred or released from inventory during year
