Tami Tyler opened Tamis Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company through its fi rst quarter of operations placed a considerable strain on Ms. Tylers personal fi nances. The following income statement for the fi rst 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 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 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 would probably have reported at least some profi t 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 fi rst quarter follow: Units produced . . . . . . . . . . . . . . . . . . . . . . . . . 30,000 Units sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,000 Variable costs per unit: Direct materials . . . . . . . . . . . . . . . . . . . . . $3.50 Direct labor. . . . . . . . . . . . . . . . . . . . . . . . $12.00 Variable manufacturing overhead. . . . . . . . . . $1.00 Variable selling and administrative. . . . . . . . . $6.00 Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. Redo the companys income statement for the quarter using absorption costing. c. Reconcile the variable and absorption costing net operating income (loss) fi gures. 2. Was the CPA correct in suggesting that the company really earned a profi t for the quarter? 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. Prepare a contribution format income statement for the quarter using variable costing. b. Prepare an income statement for the quarter using absorption costing. c. Reconcile the variable costing and absorption costing net operating incomes