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Questions at bottom of page Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through

Questions at bottom of page

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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 hasjust completed a course in managerial accounting at State University. Tani's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (23,366 units) 5 1,132,666 Variable expenses: Variable cost of goods sold 5 451,296 Variable selling and administrative 183,956 545,246 Contribution margin 486,756 Fixed expenses: Fixed manufacturing warhead 281,766 Fixed selling and administrative 213,556 568,256 Net operating loss 5 ( 13,566) 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 thatthe company should be using absorption costing ratherthan 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 producta swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: Units produced 31,366 Units sold 23,366 Variable costs per unit: Direct materials 5 7.16 Direct labor 5 7.76 Variable manufacturing overhead 5 1.56 Variable selling and administrative 5 6.56 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 31,300 units but sold 34,300 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":I c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter

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