What is the difference between the calculation of profit under the full cost method and the variable cost method?

1. Production and Sales Balance

Net Income determined under the Full Cost Method = Net Income determined under the Variable Cost Method.

2. Production and sales imbalance

1) Production is greater than sales during the period. Net income determined by the full cost method is greater than net income determined by the variable cost method.

2) Production is less than sales. The net income determined by the full cost method is less than the net income determined by the variable cost method.

Differences between the variable cost method and the full cost method:

(1) different composition of the product cost content;

(2) different valuation of inventory;

(3) different ways of calculating the profit;

(4) different amounts of profit calculated when production and sales are not balanced.