3. During the second quarter of operations, the company again produced 31,600 units but sold 34,600 units. (Assume no change in total fixed costs.)
a. What is the companys variable costing net operating income (loss) for the second quarter?
b. What is the companys absorption costing net operating income (loss) for the second quarter?
c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.
Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first quarter was prepared by a friend who has just completed a course in managerial accounting at State University. $ 1,144,000 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,600 units) Variable expenses: Variable cost of goods sold $ 449,020 Variable selling and administrative 197,340 Contribution margin Fixed expenses: Fixed manufacturing overhead 252,800 Fixed selling and administrative 256,840 Net operating loss 646, 360 497,640 509,640 $ ( 12,000) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for a bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing and argues that if absorption costing had been used the company probably would have reported at least some profit for the quarter. At this point, Ms. Tyler is manufacturing only one product-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: 31,600 28,600 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.10 $ 6.60 $ 2.00 $ 6.90 Req 1A Req 1B Req 1c Req 3A Req 3B Req 3C During the second quarter of operations, the company again produced 31,600 units but sold 34,600 units. What is the company's variable costing net operating income (loss) for the second quarter? Tami's Creations, Inc. Variable Costing Income Statement Sales $ 1,384,000 Variable expenses: Variable cost of goods sold Variable selling and administrative 543,220 238,740 781,960 602,040 Fixed manufacturing overhead Fixed selling and administrative 252,800 256,840 509,640 Net operating income (loss) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req Req 3B Req 30 During the second quarter of operations, the company again produced 31,600 units but sold 34,600 units. What is the company's absorption costing net operating income (loss) for the second quarter? (Round your intermediate calculations to 2 decimal places.) Tami's Creations, Inc. Absorption Costing Income Statement Total 0 Net operating income (loss) b. What is the company's absorption costing net operating income (loss) for the second quarter? c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 1C Req Req 3B Req 3C During the second quarter of operations, the company again produced 31,600 units but sold 34,600 units. Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter. (Losses and deductions should be entered as a negative.) Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income (loss) Absorption costing net operating income (loss)
