Requirement $2.$ Is operating income using absorption costing higher or lower than variable costing$$ income? Explain why.

The operating income using the absorption cost method is

less than

the operating income under the variable cost method.

The reason for this is because under absorption costing, the $1,000$ cases in beginning Finished Goods Inventory included

in

fixed manufacturing costs

that were not included in the inventory under the variable cost method.