The company sold $34,000$ units in the East region and $13,000$ units in the West region. It determined $$250,000$ of its fixed selling and administrative expense is traceable to the West region, $$200,000$ is traceable to the East region, and the remaining $$30,000$ is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product.

$12.$ If the company produces $4,000$ fewer units than it sells in its second year of operations, will absorption costing net operating income be higher or lower than variable costing net operating income in Year $2?$

Higher

Lower