Answer
Absorption costing income will be lower than variable costing income.
Work Step by Step
Absorption costing income will be lower than variable costing income. The variable costing income statement will only include the fixed manufacturing overhead costs incurred during the second year of operations, whereas the absorption costing cost of goods sold will include all of the fixed manufacturing overhead costs incurred during the second year of operations plus some of the fixed manufacturing overhead costs that were deferred in inventory at the end of the prior year
