In all cases when ending finished goods inventory exists, ending finished goods inventory will be higher under absorption costing, not variable costing.
This would not cause ending finished goods inventory to be higher under direct (variable) costing than under absorption costing. If more units were produced than were sold during a given year, that would cause operating income to be higher under absorption costing, but it would not cause ending finished goods inventory to be higher under variable costing.
This would not cause ending finished goods inventory to be higher under direct (variable) costing than under absorption costing. If more units were sold than were produced during a given year, that would cause operating income to be higher under variable costing, but it would not cause ending finished goods inventory to be higher under variable costing.
In all cases, ending finished goods inventory will be higher under absorption costing, not variable costing. An allocation of fixed manufacturing cost is included in inventoried goods under absorption costing whereas under variable costing it is not, because the fixed manufacturing cost is expensed as incurred under variable costing.
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