KAP 140 & Altimeter Discrepancies

Another issue I've run into with the basic AP in the C172SP is the altitude disagreements that occur whenever BP was other than 29.92.  I would dial in the new altimeter setting (also on the KAP 140) and as I leveled off at the assigned altitude I would get yelled at by ATC for being 300-500 ft. off.

After a number of frustrating attempts to resolve the issue, I slapped the B key (Set Altimeter) just to see what would happen.  Indeed, the altimeter reset to the controller's announced BP.  Out of curiosity I checked the BP on the KAP 140 - it had changed to match!  For the rest of the flight I gave up setting the altimeter manually and simply punched B.  Both the altimeter and the AP unit reset every time and the AP gently adjusted altitude if necessary.  From then on all climbs and descents went off without a hitch and there were no more squawks from ATC.  She also intercepted the Localizer with no issues,

I'll try this one more time on another flight, but it appears that setting the altimeter manually (for anything other than 29.92) results in altitude discrepancies.  But, using the hotkey shortcut sets everything properly.  I'll make sure before I submit as a bug.