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. Tami's Creations, Inc. Income statement Sales (29.000 units) For the Quarter Ended March 31 $ 1.160,000 Variable expenses. Variable cost of goods sold $ 461,100 Variable selling and administrative 197,200 658,000 Contribution margin 501, 700 Fixed expenses: Tixed manufacturing overhead 256,000 Fixed selling and administrative 257700 51), 700 Net operating loss $ 12,000) 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-a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: 32,000 29,000 Units produced Units sola Variable coata per uniti Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.50 $ 6.50 $ 1.90 $ 6.00 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 32,000 units but sold 35,000 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? 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. Req IA Reg 18 Req 1C Reg Reg 3B Reg 3C Compute the unit product cost under absorption costing, (Round your answer to 2 decimal places.) Unit product cost CROQ IA Reg 1B > 3. During the second quarter of operations, the company again produced 32,000 units but sold 35,000 units. (Assume 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? 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. Reg 1A Reg 1B Req 1C Req 3A Req 3B Reg 3C What is the company's absorption costing net operating income (loss) for the quarter? (Round your intermediate calculations to 2 decimal places.) Tami's Creations, Inc. Absorption Costing Income Statement Total Net operating income (loss) Complete this question by entering your answers in the tabs below. Reg 1A Reg 18 Req 1C Req Reg 38 Reg 3C During the second quarter of operations, the company again produced 32,000 units but sold 35,000 units. What is the company's variable costing net operating income (loss) for the second quarter? Tami's Creations, Inc. Variable Costing Income Statement Net operating income (loss) Reg 1A Req 1B Req 1C Req Req 3B Req 3C During the second quarter of operations, the company again produced 32,000 units but sold 35,000 units. 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 Total Net operating income (loss) Reg 1A Req 1B Reg 1C Req Reg 3B Reg 3C During the second quarter of operations, the company again produced 32,000 units but sold 35,000 units. 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) Absorption costing net operating income (loss)
