Iami Tyler opened lami'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 . Tami's Creations , Inc. Income Statement For the Quarter Ended March 31 Sales ( 28, 000 units ) $ 1 , 120 , 000 Variable expenses :" Variable cost of goods sold* 462 , 000 Variable selling and administrative* 168 , 000 6:30, 000 Contribution margin 490 , 000 Fixed expenses :` Fixed manufacturing overhead 300 , 000 Fixed selling and administrative 200 , 000 500 , 000 Net operating loss $ ( 10 , 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 :" Units produced 30, 000 Units sold 28 , 000 Variable costs per unit :" Direct materials 3.50 Direct labor* $ 12.00 Variable manufacturing overhead $ 1. 00 Variable selling and administrative* $ 6.00 Required :` 1 . Complete the following : " 2 . 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 30 , 000 units but sold 32 , 000 units . ( Assume no change in total Fixed costs . ) 2 . What is the company's variable costing net operating income ( loss ) for the second quarter ?' ` . What is the company's absorption costing net operating income ( loss ) for the second quarter ?" . . Reconcile the variable costing and absorption costing net operating incomes for the second quarter