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The following table shows the inventory balances, in units, for years 1, 2, and 3. Total fixed manufacturing costs were $60,000 for each of the
The following table shows the inventory balances, in units, for years 1, 2, and 3. Total fixed manufacturing costs were $60,000 for each of the last five years. The units in Year 1 beginning inventory were based on production of 600 units. Year 1 2 3 150 0 250 750 Beginning inventory Production Sales Ending inventory 600 (750) 0 750 (500) 250 (750) 250 | For each year, calculate the difference between absorption costing and variable costing operating income. Indicate which costing system has the higher net income. Year 1 2 3 Difference in operating income $ $ Costing system that has higher net income
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