The following table shows the inventory balances, in units, for years 1, 2, and 3. Total fixed manufacturing costs were $30,000 for each of the last five years. The units in Year 1 beginning inventory were based on production of 500 units.

Required
For each year, calculate the difference between absorption costing and variable costing operating income. Be sure to indicate which costing system has the higher netincome.

Transcribed Image Text:

Year 3 100 600 2 Beginning inventory Production Sales 50 500 600 (550) 500) (600) 100 100 Ending inventory