Answer:
<u>Absorption income           114, 610         127,500           127,320    </u>
Explanation:
                                          Year 1          Year 2          Year 3
Beginning finished 
Goods inventory (units)      0               1,550             1,050
Ending finished 
Goods inventory (units) 1,550            1,050                 1,150 
Change in Inventory        1550            500                  100
Fixed manufacturing
<u> Overhead per unit          $ 3.80           $ 3.80           $ 3.80 </u>
<u>Absorption Income Less</u>
<u>Variable Income                $ 5890         ($ 1900)         $ 380</u>
 Variable costing income $ 120,500 $ 125,600 $ 127,700
<u>            Difference             $ 5890       ( $ 1900 )       $ 380</u>
<u>Absorption income           114, 610         127,500           127,320    </u>
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When inventory increases or decreases income differs under absorption and variable costing  and is calculated by the following formula
Difference in fixed expense overhead expensed under absorption and variable costing = Change in inventory units * Predetermined overhead rate
When the inventory  units increase the fixed manufacturing overhead cost is released from inventory and deducted from variable income. 
Similarly when the inventory units decrease the  the fixed manufacturing overhead cost is deferred from inventory and added to variable income.