Fixed Overhead Absorption in Inventory Steps:

• Identify profit difference: Marginal costing expenses all fixed manufacturing costs in the period; absorption costing allocates them to units produced.
• Analyze inventory impact: If production exceeds sales, inventory rises, deferring fixed costs in stock under absorption costing.
• Compare profits: Switching to absorption increases profit when fixed costs are deferred, versus full expensing in marginal.
• Conclude condition: Profit increase implies production > sales.

Why B is correct:

• Under absorption costing, when production > sales, fixed overheads are absorbed into closing inventory, deferring costs and boosting profit relative to marginal costing's full period expensing.

Why the others are wrong:

• A: Equal production and sales mean no inventory change, so fixed costs treated identically and profits unchanged.
• C: Production < sales decreases inventory, releasing previously absorbed fixed costs under absorption, lowering profit versus marginal.
• D: Identical to B, but listed separately—still correct, though redundant.

Final answer: B