Income statements under absorption costing and variable costing Instructions Labels and Amount Descriptions Absorption Costing Income Statement Variable Costing Income Statement Final Question Instructions Absorption Costing Income Statement a. Prepare an income statement according to the absorption costing concept. b. Prepare an income statement according to the variable costing concept. c. What is the reason for the difference in the amount of Operating income reported in (a) and (b)? Check all that apply. Under absorption costing, when inventory increases, the income statement will have a lower Operating income than will the variable costing income statement. Under absorption costing, when inventory increases, the income statement will have a higher Operating income than will the variable costing income statement. There is no difference; the Operating income reported in (a) and (b) is the same. Under variable costing, the units that were produced but unsold include fixed factory overhead cost, which is not included in cost of goods sold. Under variable costing, all of the fixed factory overhead cost is deducted in the period in which it is incurred, regardless of the amount of inventory change