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 fust quarter was prepared by a friend who has just completed a course in managerial accounting at State University Tani'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 margin 490,000 Fixed expenses Fixed manufacturing overhead 300,000 Fixed selling and administrative 200,000 500,000 5 Net operating loss (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, 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--- swimsuit Production and cost data relating to the swimsuit for the test quarter follow 30,000 20.000 Units produced Units sold Variable costs per unit: Direct materials Direct labor $ 3.50 $12.00 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 30.000 28.000 Units produced Units soid Variable costs per unit Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 3.50 $ 12.00 $ 1.00 $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? Reconcile the variable and absorption costing net operating income (loss) figures 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) 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? 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 1A Reg 13 Req ic Reqa Reg 3B Regac
