Where NIV, i, t is net income before tax of
company i at time t under variable costing; NIA, i, t
is net income before tax of company i at time
t, under absorption costing; BINVi, t is beginning
inventory based on absorption costing of company
i at time t; EINVi, t is ending inventory based on
absorption costing of company i at time t; Xi, t is
fi xed manufacturing costs of company i at time t;
and Yi, t is total manufacturing costs of company
i at time t