Miller Heating Company is a small manufacturer of auxiliary heaters. The units sell for $300 each. In 2014, the company produced 1,000 units and sold 800 units. There was no beginning inventory. Below are variable and full costing income statements for 2014.

Required
Reconcile the difference in profit between the two income statements.

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Income Statement Prepared Using Variable Costing Miller Heating Company Income Statement For the Year Ending December 31,2014 Sales Less variable costs: 240,000 Variable cost of goods sold Variable selling expense $32,000 16,000 48,000 192,000 Contribution margin Less fixed costs: Fixed manufacturing expense Fixed selling expense Fixed administrative expense 50,000 20,000 30,000 100,000 $ 92,000 Net income Income Statement Prepared Using Full Costing Miller Heating Company Income Statement For the Year Ending December 31,2014 Sales Less cost of goods sold Gross margin Less selling and administrative expenses: $240,000 72,000 168,000 Selling expense Administrative expense $36,000 30,000 66,000 102,000 Net income