Messimer manufactures a single product and sells it for $10 per unit. At the beginning of the year, there were 1,000 units in inventory. Upon further investigation, you discover that units produced last year had $3.00 of fixed manufacturing cost and $2.00 of variable manufacturing cost. During the year, Messimer produced 10,000 units of product.Each unit produced generated $3.00 of variable cost. The total fixed manufacturing cost for the current year was $40,000. There were no inventories at the end of the year.

Required:

Prepare two income statements for the current year, one using Variable Costing and the other using Absorption Costing. Explain any difference between the two net income numbers and provide calculation supporting your explanation of the difference.