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 3Inventories:Beginning (units) 200 170 180Ending (units) 170 180 220Variable costing netoperating income $1,080,400 $1,032,400 $996,400The company's fixed manufacturing overhead per unit was constant at $560 for all three years. Requirement 1:Determine each year’s absorption costing net operating income. Present your answer in the form of a reconciliation report for year 1, 2 and 3.Year 1 Year 2 Year 3Beginning inventoriesEnding inventoriesChange in inventoriesFixed manufacturing overhead in beginning inventoriesFixed manufacturing overhead in ending inventoriesFixed manufacturing overhead deferred in (released from) inventorieVariable costing net operating incomeAdd (deduct) fixed manufacturing overhead cost deferred in (released from) inventory under absorption costingAbsorption costing net operating incomeRequirement 2:In Year 4, the company's variable costing net operating income was $984,400 and its absorption costing net operating income was $1,012,400.(a) Did inventories increase or decrease during Year 4?(b) How much fixed manufacturing overhead cost was deferred or released from inventory during Year 4?Deferred or released ???Ffixed manufacturing overhead cost $