Problem 7-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO7-1, LO7-2, LO7-3] 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. Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 $ 1,136,000 Sales (28,400 units) Variable expenses Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative S 423.160 194,540 617.700 518,300 300,600 240,200 540,800 S (22,500) Net operating loss 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 33,400 28,400 Units produced Units sold Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.30 $ 5.80 $ 1.80 $ 6.85 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 33,400 units but sold 38,400 units. (Assume no change in total fixed 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. Print View Page 2 of 2 Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 1C Req 3A Reg 3B Req 3C Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) Unit product cost Req 1A. Req 1B rev: 03 26 2019 QC CS-163919, 06-18 2019 QC_Cs-165659 References Leaning Objective: 07-02 Prepare income statements using both variable and absorption costing Difficulty: 2 Medium Worksheet Leaning Objective: 07-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ. Leaming Objective: 07-01 Explain how variable costing differs from absorption costing and compute unit product costs under each method. Problem 7-23 Absorption and Variable Costing: Production Constant, Sales Fluctuater (LO7-1, LO7-2, LO7-3] ERea 1B Req 1C Reg 3A Reg 3B Reg 3C Req 1A What is the company's absorption costing net operating income (loss) for the quarter? (Round your intermediate calculations to 2 decimal places.) Taml's Creations, Inc. Absorption Costing Income Statement Net operating income (loss) Req 1C Req 1A Req 3C Req 3B EReg 1C Reg 3A Reg 1B Reg 1A Reconcile the variable and absorption costing net operating income (loss) fiqures. (Losses and deductions should be entered as a negative.) Reconciliation of Variable Costing and Absorption Costing Not Operating Incomes Variable costing net operating income (loss) Absorpion costing net operating income (loss) Req 3A Req 1B Req 3C Req 3B Rea JAc Req 1C Req 18 Req 1A During the second quarter of operations, the company again produced 33,400 units but sold 38,400 units. (Assume no change in total fixed costs.) What is the company's variable costing net operating income (loss) for the second quarter? Tami's Creations, Inc. Variable Costing Income Statement Net operating income (loss) Req 3B Req 1C A ERea 3B Req 3C Reg 1C Req 1B Req 1A During the second quarter of operations, the company again produced 33,400 units but sold 38,400 units. (Assume no change in total fixed costs.) 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 Net operating income (loss) Req 3A Req 3C Req 3B Req 1B Req 1C Reg 3A Req 1A. During the second quarter of operations, the company again produced 33,400 units but sold 38,400 units. (Assume no change in total flxed costs.) Reconcile the variable costing and albsorption 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) Absorplion cossing net operating income (Goss) Req 3B Reg 3C)