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King Tooling has produced and sold the following number of units of their only product during their first two years in business: Year ended December

King Tooling has produced and sold the following number of units of their only product during their first two years in business: Year ended December 31, Year 1 Produced 50,000 Sold 40,000 Year ended December 31, Year 2 Produced 50,000 Sold 55,000 Production costs per unit have not changed over the two-year period. Under variable costing, what is the amount of cost of sales relative to the cost of sales shown on the GAAP income statement of the company?

Year 1 Year 2

A. Higher Higher

B. Higher Lower

C. Lower Higher

D. Lower Lower

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