PROBLEM 1 (Continued) 4. Reconcile the difference between variable-costing income and absorption-costing income. PROBLEM 2 Griffiths Manufacturing uses an actual cost system for product costing. The company's income statement for 2004 is presented below: Griffiths Manufacturing Income Statement For the Year Ending December 31, 2004 Sales (10,000 units @ $20)..... $200,000 Cost of goods sold: Finished goods inventory, January 1 Cost of goods manufactured (12,000 units @ $15). $ -0- 180,000 Goods available for sale. $180,000 Finished goods inventory, December 31 (2,000 units @ $15).... 30,000 Cost of goods sold. Gross margin 150,000 $ 50,000 Operating expenses: Selling.. $ 20,000 Administrative. Total selling and administrative. 20,000 40,000 $10,000 Net income....... The following additional information is available: Variable costs per unit: Direct materials $4 Direct labour...... Manufacturing overhead. 2 Selling expense. Fixed costs for the period: Manufacturing overhead.. Selling $48,000 10,000 Administrative.. 20,000 HERE