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 For the Quarter Ended March 31 Sales (28,450 units] $1,138,000 Variable expenses: Variable cost of goods sold $463,735 Variable selling and administrative 196,305 660,040 Contribution margin 477,960 Fixed expenses: Fixed manufacturing overhead 267,600 Fixed selling and administrative 230,360 497,960 Net operating loss $( 20.000} [ 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 prot for the quarter. At this point, Ms. Tyler is manufacturing only one producta swimsuit. Production and cost data relating to the swimsuit for the rst quarter follow: Units produced 33,450 Units sold 28,450 Variable costs per unit: Direct materials $ 7.10 Direct labor $ 7.60 Variable manufacturing overhead $ 1.60 Variable selling and administrative $ 6.90 [ 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) gures. 3. During the second quarter of operations, the company again produced 33,450 units but sold 33,450 units. (Assume no change in total xed 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 1A Req 1B Req 1C Req 3A Req 3B Req 3C Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) Unit product costWhat is the company's absorption costing net operating income (loss) for the quarter? (Round your intermediate calculations to 2 decimal places.) Net operating income (loss) Reconcile the variable and absorption oosting net operating income (loss) gures. (Losses and deductions should be entered as a negative.) Variable costing net operating income (loss) Absorption costing net operating income (loss) During the second quarter of operations, the company again produced 33,450 units but sold 38,450 units. (Assume no change in total fixed costs.) What is the company's variable costing net operating income (loss) for the second quarter? Net operating income (loss) ' Req 1A H Req 1B H Req 1C During the second quarter of operations, the company again produced 33,450 units but sold 38,450 units. (Assume no change in total fixed costs.) What is the company's absorption costing net operating income (loss) for the second quarter? (Round your intermediate calculations to 2 decimal places.) Net operating income (loss) During the second quarter of operations, the company again produced 33,450 units but sold 38,450 units. (Assume no change in total fixed costs.) Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter. (Losses and deductions should be entered as a negative.) Variable costing not operating income (loss) Absorption costing net operating income (loss)
