Problem 7-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate (L07-1, L07-2, LO7-3) Tami Tyler opened Tom'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 of State University Tami's creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,850 units) $ 1,122,000 Variable expenses: Variable cost of goods sold $403,920 Variable selling and administrative 193,545 597,465 Contribution margin 1 524,535 Fixed expenses: Fixed manufacturing overhead 266,00 Fixed selling and administrative 2100, 115 54435 het operating loss 5 ( 20,000) 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-- swimsuit Production and cost doto relating to the swimsuit for the first quarter follow 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 dota relating to the swimsuit for the first quarter follow 33,050 28,050 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead variable selling and administrative $7.10 $ 5.80 $ 1.50 $6.90 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 33,050 units but sold 38,050 units. (Assume no change in total fixed costs) What is the companys 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. 1 Regina Reg 1B Req 1C Reg 3A Reg 3B Reg 30 nces Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) Unit product cost 14.40 KRO1A Req 13 > Complete this question by entering your answers in the tabs Del Reg 1A Req 1B Req 1C Req Req 3B Req 3C What is the company's absorption costing net operating income (loss) for the quarter? (Round yo to 2 decimal places.) Tami's Creations, Inc. Absorption Costing Income Statement es 0 Net operating income (loss) Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Reg ife Reg 3A Reg 3B Reg 30 Reconcile the variable and absorption costing net operating income (loss) figures. (Losses and deductions should be 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) During the second quarter of operations, the company again produced 33,050 units but sold 38,050 units. (Ass 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 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative olo Contribution margin Fixed expenses Fixed manufacturing overhead Fixed selling and administrative 0 Net operating income (loss) Reg 1A Reg 1B Reg 10 Reg 3A Reg 3B Reg 3C During the second quarter of operations, the company again produced 33,050 units but sold 38,050 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 Sales Cost of goods sold Gross margin 0 Selling and administrative expenses Net operating income (loss) Ces Reg 1A Reg 1B Req 1C Req 3A Reg 3B Reg 30 During the second quarter of operations, the company again produced 33,050 units but sold 38,050 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) Less: Fixed manufacturing overhead cost deferred in Inventory under absorption costing Absorption costing net operating income (los)