Problem 7-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO7-1, LO7-2, L07-3) Tomi 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 incom 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 Sales (28.000 units) For the Quarter Ended March 31 51,120,000 Variable expenses Variable cost of goods sold 5439,600 Variable selling and administrative 196,000 635,600 Contribution margin 484,400 Fixed expenses Fixed manufacturing overhead 297.000 Fixed selling and administrative 209.900 506.900 Net operating loss 22,500) Ms. Tyler is discouraged over the loss shown for the quarter particularly because sh 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 an cost data relating to the swimsuit for the first quarter follow 33.000 28,000 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.50 $5.60 $ 1.60 5.7.00 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 c. Reconcile the variable and absorption costing net operating income (loss) figures 3. During the second quarter of operations, the company again produced 33.000 unit but sold 38,000 units. (Assume no change in total foed 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 secon quarter? c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter Check my work 6 25 points 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 33,000 units but sold 38,000 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. eBook Print Complete this question by entering your answers in the tabs below. References Req 1A Reg 1B Req 10 Req Reg 38 Req3C During the second quarter of operations, the company again produced 33,000 units but sold 38,000 units. costs.) What is the company's variable costing net operating income (loss) for the second quarter? Tami's Creations, Inc. Variable Costing Income Statement 0 0 Net operating income (loss) 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 33,000 units but sold 38,000 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. Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 10 Req Req3B Req 3C During the second quarter of operations, the company again produced 33,000 units but sold 38,000 units. costs.) What is the company's absorption costing net operating income (loss) for the second quarter? (Ro 2 decimal places.) Tami's Creations, Inc. Absorption Costing Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) 5 Check my work 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: 33,000 28,000 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.50 $ 6.60 $ 1.60 $ 7.00 Book Print o rences 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 33,000 units but sold 38,000 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. Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Req1c Req3A Req38 Reg 3C During the second quarter of operations, the company again produced 33,000 units but sold 38,000 units costs.) Reconcile the variable costing and absorption costing net operating incomes (losses) for the secc 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)