When sales exceed production,variable-costing income is greater than absorption-costing income.

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In variable costing, fixed manufacturing overhead costs are treated as period costs and are expensed in the period incurred, while in absorption costing, fixed manufacturing overhead costs are included in the cost of goods sold. When sales exceed production, there are fewer units to which fixed overhead costs can be allocated, resulting in a higher per-unit cost under absorption costing. This means that variable-costing income will be greater than absorption-costing income in this situation.

When Sales Exceed Production,variable-Costing Income Is Greater Than Absorption-Costing Income