Discuss and Compare Absorption Costing Income Statements with Variable Costing

Essay

Discuss and compare absorption costing income statements with variable costing income statements. In your discussion, address the following questions:
a. What is the main difference between the two methods?
b. Under what circumstances will the operating income under each method be the same?
c. What situation will cause the absorption costing income to be higher than the variable costing income?
d. What situation will cause the absorption costing income to be lower than the variable costing income?
e. Why would a company use absorption costing to prepare its income statements?
f. Why would a company use variable costing to prepare its income statements?