Tami Tyler opened Tami$$s Creations, Incorporated, a small manufacturing company, at the beginning of the year. Getting the company through its first quarter of operations placed a considerable strain on Ms$.$ Tyler$$s personal finances. The following income statement for the first quarter was prepared by a friend who just completed a course in managerial accounting at State University.

Tami$$s Creations, Incorporated

Income Statement

For the Quarter Ended March $31$Sales $(28,900$ units$)$$ $1,156,000$Variable expenses:$$Variable cost of goods sold$ $488,410$Variable selling and administrative$176,290664,700$Contribution margin$491,300$Fixed expenses:$$Fixed manufacturing overhead$ $287,100$Fixed selling and administrative$217,700504,800$Net operating loss$$$ $(13,500)$

Ms$.$ Tyler is discouraged over the loss shown for the quarter, particularly because she hoped to use the statement as support for a bank loan. Another friend, a CPA, insists the company should be using absorption costing rather than variable costing and claims if absorption costing had been used, the company probably would have reported a profit for the quarter.

At this point, Ms$.$ Tyler makes only one product$$a swimsuit. Production and cost data for the first quarter follow:

Units produced$31,900$Units sold$28,900$Variable costs per unit:$$Direct materials$ $7\mathrm{.}60$Direct labor$ $7\mathrm{.}70$Variable manufacturing overhead$ $1\mathrm{.}60$Variable selling and administrative$ $6\mathrm{.}10$

Required:

$1.$ Complete the following:

Compute the unit product cost under absorption costing.

What is the company$$s absorption costing net operating income $($loss$)$ for the quarter?

Reconcile the variable and absorption costing net operating income $($loss$)$ figures.

$3.$ During the second quarter of operations, the company again produced $31,900$ units but sold $34,900$ units. $($Assume no change in total fixed costs.$)$

What is the company$$s variable costing net operating income $($loss$)$ for the second quarter?

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 $($losses$)$ for the second quarter.