N Company prepared an Absorption Costing income statement for this last year showing Income of $26,000. It then prepared a Variable Costing (sometimes called "Direct" Costing) income statement for this last year showing Income of -$4,000. (That's right, it showed a Net Loss.) Use the following information for this company for last year to write up a short paragraph explaining why the Incomes under the two methods differed by $30,000 (Be sure to INCLUDE your supporting computations!)

Company Information: (a) It was the first year of operation for N Company (so there was no Beginning Finished Goods Inventory), (b) Company only has one product and Production Volume was 12,000 units, ( c) Sales Volume was 8,000 units, (d) Sales Price per unit was $58.75 ( e) Direct Material Cost per unit was $18.00 (f) Direct Labor Cost per unit was $9.00 (g) Variable Overhead Cost per unit was $6.00 (h) Total Fixed Overhead for the year was $90,000 (i) Variable Expense per unit was $5.00 and (j) Total Fixed Expenses for the year were $80,000. Ignore income taxes.