Miller Heating Company is a small manufacturer of auxiliary heaters. The units sell for $150 each. In 2011, the company produced 1,000 units and sold 800 units. Below are variable and full costing income statements for 2011.

Required
Reconcile the difference in profit between the two incomestatements.

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Income Statement Prepared Using Variable Costing Miller Heating Company Income Statement For the Year Ending December 31,2011 Sales Less variable costs $120,000 Variable cost of goods sold Variable selling expense $16,000 8,000 24,000 96,000 Contribution margin Less fixed costs: Fixed manufacturing expense Fixed selling expense Fixed administrative expense 25,000 10,000 15,000 50,000 46,000 Net income Income Statement Prepared Using Full Costing Miller Heating Company Income Statement For the Year Ending December 31,2011 Sales Less cost of goods sold Gross margin Less selling and administrative expenses: $120,000 36,000 84,000 Selling expense Administrative expense $18,000 15,000 33,000 51,000 Net income