Bird's Eye View manufactures satellite dishes used in residential and commercial installations for satellite-broadcasted television. For each unit, the following costs apply: $50 for direct material, $100 for direct labor, and $60 for variable overhead. The company's annual fixed overhead cost is $750,000; it uses expected capacity of 12,500 units produced as the basis for applying fixed overhead to products. A commission of 10 percent of the selling price is paid on each unit sold. Annual fixed selling and administrative expenses are $180,000. The following additional information is available:

2013 2014

Selling price per unit $500 $500

Number of units sold 10,000 12,000

Number of units produced 12,500 11,000

Beginning inventory (units) 7,500 10,000

Ending inventory (units) 10,000 ?

Requirements: Prepare pre-tax income statements under asorption and variable costing for the years ended 2013 and 2014, with any volume variance being charged to Cost of Goods Sold. Reconcile the differences in income for the two methods.