When physical inventory levels are decreasing,absorption cost income tends to rise since fixed overhead that was previously in inventory gets charged against income as part of the cost of goods sold.

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When physical inventory levels are decreasing, absorption cost income tends to decrease because less fixed overhead is being allocated to inventory and more is being charged as part of the cost of goods sold. As a result, there is a higher cost of goods sold and a lower gross profit, leading to a decrease in net income.

When Physical Inventory Levels Are Decreasing,absorption Cost Income Tends to Rise