Which of the following statements about absorption costing is INCORRECT?

Group of answer choices

The higher the denominator level, the higher the amount of fixed manufacturing costs allocated to each unit produced.

Operating income increases as a company increases its inventory level

Which of the following statements about variance analysis is INCORRECT?

Group of answer choices

It should be used to punish employees that do not meet standards.

It should be used to investigate why variances arise.

It can promote organization learning and lead to improvement in future performance.

Managers should not automatically interpret a variance as good or bad performance.

It provides incentives for managers to build up finished goods inventory

Operating income using absorption costing is lower than that under variable accounting when units sold exceed units produced