Requirement $2.$ Which statement shows the higher operating income? Why?

Absoriftion costing operating income is higher than variable costing operating income. This is because absorption costing defers $$200,000$ of fixed manufacturing overhead as an asset in ending inventory. In contrast, variable costing expenses all of the fixed manufacturing overhead during the year.

Variable costing expenses $ $$ costs during the year, so variable costing operating income is $ $$ than absorption costing income the year.