The following table shows the inventory balances, in units, for years 1, 2, and 3. Total fixed manufacturing costs were $45,000 for each of the last five years. The units in Year 1 beginning inventory were based on production of 900 units. Year 1 2 Beginning inventory 100 0 500 Production 900 1,000 1,000 Sales (1,000) (500) (1,000) Ending inventory 0 500 500 For each year, calculate the difference between absorption costing and variable costing operating income. Indicate which costing system has the higher net income. Difference in operating income Costing system that has higher net income 1 Year 2 3