$4$

Taml Tyler opened Tami's Creatlons, Incorporated, 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 frlend who has just completed a course In managerlal accounting at State University.

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 frlend, a CPA, Insists that the company should be using absorption costing rather than varlable 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 swimsult. Production and cost data relating to the swimsult for the first quarter follow:

Units produced

Units sold

Variable costs per unit:

Direct materials

Direct labor

Variable manufacturing overhead

Variable selling and adninistrative

$31,70028,700$ $$7\mathrm{.}40$ $$7\mathrm{.}10$ $$1\mathrm{.}80$ $$6\mathrm{.}70$

Required:

Complete the following:

a$.$ Compute the unit product cost under absorptlon costing.

b$.$ What Is the company's absorption costing net operating Income $($loss$)$ for the quarter?

c$.$ Reconcile the varlable and absorption costing net operating Income $($loss$)$ figures.

During the second quarter of operations, the company again produced $31,700$ units but sold $34,700$ units. $($Assume no change In total fixed costs.$)$

a$.$ What is the company's varlable costing net operating income $($loss$)$ for the second quarter?

b$.$ What is the company's absorption costing net operating income $($loss$)$ for the second quarter?

c$.$ Reconcile the varlable costing and absorption costing net operating Incomes $($losses$)$ for the second quarter.

Complete this question by entering your answers in the tabs below.

Req $1A$

Req $1B$

Req $1C$

Req $3$ A

Req $38$

Req $3C$

During the second quarter of operations, the company again produced $31,700$ units but sold $34,700$ units. $($Assume no change in total fixed costs.$)$ 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$)$