Question 2 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. Con The Tad MET tout M 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 168,000 630,000 Contribution mare 190,000 Fed expenses Faed manufacturing overhead 300,000 Find selling and administrative 200,000 500,000 Net operating low 5 (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, CPA, that the company should be using absorption costing rather than variable casting and was that shortion costing had been the company probably would have reported at least some profit for the quarter. At this point, Ms. Tyler is mandaturing only one produd a swimult. Production and cont duta relating to the swimsuit for the first quarter follow Units produced 10,000 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 Compute the unit product cost under absorption costing What is the company's absorption conting net operating income on) for the quarter? Reconcile the variable and absorption costing niet operating income on figures 2. Was the CPA correct in suggesting that the company really earned a profile for the quarter? Explain. Complete the following . Com the unit product cout under absorption costing (Round your intermediate and final answers to 2 decimal places) SHOP NOW a. 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.) 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? Reconcile the variable costing and absorption costing net operating incomes for the second quarter. c. n3 * said David Wilson, president of Teledex Company. We've just lost the bid on the Koopers job 9. It seems we're either too high to get the job or too low to make any money on half the jobs we ompany manufactures products to customers' specifications and uses a job-order costing e company uses a plantwide predetermined overhead rate based on direct labor cost to apply turing overhead (assumed to be all fixed) to jobs. The following estimates were made at the the year
