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(e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because: (You

(e) The net operating income (loss) under absorption costing is less than the net operating income (loss) under variable costing in Year 2 because:

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a. Units were left over from the previous year

b. The cost of goods sold is always less under variable costing than under absorption costing

c. Sales exceeded production so some of the fixed manufacturing overhead of the period was released from inventories under absorption costing.

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