Requirement $4.$ Tim

SweeneySweeney

is$$ concerned: He notes that despite an increase in sales over

$20192019,$

$20202020$

operating income has actually declined under absorption costing. Explain how this occurred.

Under absorption$$ costing, operating income is a function of

$$

$$

During

$20202020,$

FieldingFielding

experienced a

$$

$$

in inventory levels as a result of

$$

$$

The end result was that much of

$$

$$

$2019\text{'}$s beginning inventory passed through cost of goods sold in the following year.

$2020\text{'}$s beginning inventory passed through cost of goods sold in $2020.$

$2020\text{'}$s ending inventory will pass through cost of goods sold in the following year.