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. Tamis Creations, Inc. Income Statement For the Quarter Ended March 31 762,300 Sales (21,000 units) Variable expenses: 258,300 Variable cost of goods sold 164,850 423,150 Variable selling and administrative 339,150 Contribution margin Fixed expenses: 206,400 Fixed manufacturing overhead 216,000 422,400 Fixed selling and administrative Net operating loss s (83,250) Ms. Tyler is discouraged ower 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 would probably have reported at least some profit for the quarter 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: 24,000 Units produced Units sold Variable costs per unit 21,000 S 7.50 S 2.80 Variable manufacturing overhead 2.00 ariable selling and administrative 7.85 Direct materials Direct labor