c. What is the reason for the difference in the amount of operating income reported in (a) and (b)?

Under the __________method, the fixed manufacturing cost included in the cost of goods sold is matched with the revenues. Under ____________all of the fixed manufacturing cost is deducted in the period in which it is incurred, regardless of the amount of inventory change. Thus, when inventory increases, the ___________income statement will have a higher operating income.

Income Statements under Absorption Costing and Variable Costing If required, round interim per-unit calculations to the nearest cent. a. Prepare an income statement according to the absorption costing concept. b. Prepare an income statement according to the variable costing concept