Apple’s ending inventory amounts (in $ millions) are shown below:

Required 1. Assume Apple uses variable costing for some of its internal reports. For each of the years 2015 and 2014, would net income based on variable costing be higher, lower, or no different from net income based on absorption costing? Explain.
2. Assume Apple is considering implementing a just-in-time (JIT) inventory system. Would a JIT system increase, decrease, or have no effect on differences in net income between absorption costing and variable costing? Explain.

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2015 2014 2013 Ending inventory. $2,349 $2,111 $1,764