6.5 Grainger Company produces only one product and sells that product for $100 per unit. Cost information for the product is:

Direct Material $15 per Unit Direct Labor $25 per Unit Variable Overhead $5 per Unit Fixed Overhead $34,000 Selling expenses are $4 per unit and are all variable. Administrative expenses of $20,000 are all fixed. Grainger produced 5,000 units; sold 4,000; and had no beginning inventory.

A. Compute net income under i. absorption costing ii. variable costing B. Reconcile the difference between the income under absorption and variable costing.