Assuming fixed costs remain constant,and a company produces and sells the same number of units,then income under absorption costing is less than income under variable costing.

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Under absorption costing, fixed manufacturing overhead costs are included in the cost of each unit produced and are only expensed when the units are sold. In contrast, under variable costing, fixed manufacturing overhead costs are expensed as period costs and are not included in the cost of each unit produced. Therefore, if a company produces and sells the same number of units, income under absorption costing will be higher than income under variable costing because more fixed manufacturing overhead costs will be allocated to the units sold.

Assuming Fixed Costs Remain Constant,and a Company Produces and Sells