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 (28,700 units) $1,148,000 Variable expenses : Variable cost of goods $447,720 sold Variable selling and 195, 160 642,880 administrative Contribution margin 505,120 Fixed expenses: Fixed manufacturing 253,600 overhead Fixed selling and 263,520 517, 120 administrative 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: 31,700 28,700 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $7.40 $6.50 $1.70 $6.80 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 31,700 units but sold 34,700 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 1A Req 1B Req 10 Req 3A Req 3B Req 30 Compute the unit product cost under absorption costing. (Round your answer to 2 decimal places.) Unit product cost Req 1A Req 1B Req 10 Req 3A Req 3B Req 30 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) Req 1A Req 1B Req 1C Req 3A Req 3B Req 30 Reconcile the variable and absorption costing net operating income (loss) figures. (Los: 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) Req 1A Req 1B Req 1C Req 3A Req 3B Req 30 During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. What is the company's variable costing net operating income (loss) for the second quarter? Show less A Tami's Creations, Inc. Variable Costing Income Statement Net operating income (loss) Req 1A Req 1B Req 10 Req 3A Req 3B Req 30 During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. What is the company's absorption costing net operating income (loss) for the second quarter? (Round your intermediate calculations to 2 decimal places.) Show less A Tami's Creations, Inc. Absorption Costing Income Statement Total Net operating income (loss) Reg 3A Req 3C > Req 1A Req 1B Req 10 Req 3A Req 3B Req 30 During the second quarter of operations, the company again produced 31,700 units but sold 34,700 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.) Show less A Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income (loss) Absorption costing net operating income (loss)
