$1,126,000 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28, 150 units) Variable expenses: Variable cost of goods sold $ 464, 475 Variable selling and administrative 194, 235 Contribution margin Fixed expenses: Fixed manufacturing overhead 298, 350 Fixed selling and administrative 191, 440 Net operating loss 658, 710 467, 290 489, 790 $( 22,500) Ms. Tyler is discouraged over the loss shown for the quarter, particularly becau a bank loan. Another friend, a CPA, insists that the company should be using ab argues that if absorption costing had been used the company probably would h At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Productio quarter follow: 33, 150 28, 150 Units produced Units sold Variable costs per unit: Direct materials Direct labor Warini monifontana $ 7.20 S 7.40 100 roblem 7-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO7-1, LO7-2, 07-3] ami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company throug first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the uarter was prepared by a friend who has just completed a course in managerial accounting at State University 1, 126,000 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28, 150 units) Variable expenses: Variable cost of goods sold $ 464, 475 Variable selling and administrative 194, 235 Contribution margin Fixed expenses: Fixed manufacturing overhead 298,350 Fixed selling and administrative 191, 440 Net operating loss 658, 710 467, 290 489, 790 $( 22,500) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable cosung and argues that it absorption costing had been used the company probably would have reported at least some profi