Accounting
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 hasjust completed a course in managerial accounting at State University. Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,700 units) $ 1,148,000 Variable expenses: Variable cost of goods sold 53 419.020 Variable selling and administrative 180,810 599,830 Contribution margin 548.170 Fixed expenses: Fixed manufacturing overhead 253.600 Fixed selling and administrative 306,570 560,170 Net operating loss $ ( 'I 2,000) 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 producta swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: Units produced 31.700 Units sold 28,700 Variable costs per unit: Direct materials 53 7.30 Direct labor 9:: 5.70 Variable manufacturing overhead $ 1.60 Variable selling and administrative $ 6.30 l Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile the variable and absorption costing net operating income (loss) figures. 3. During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. (Assume no change in total xed costs.) a. What is the company's variable 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 variable costing and absorption costing net operating incomes for the second quarter. During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. What company's variable costing net operating income (loss) for the second quarter? $ 1 ,148,000 1 ,148,000 Net operating income (loss) During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. company's absorption costing net operating income (loss) for the second quarter? (Round your intermedia decimal places.) Net operating income (loss) Req 1A Req 10 Req 1C Req 3A Req 35 Req 3C E During the second quarter of operations, the company again produced 31,700 units but sold 34,700 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.) Variable costing net operating income (loss) Absorption costing net operating income (loss)
