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 Tani's Creations, Inc. Incone Statement For the Quarter Ended March 3 Sales (25,000 units) Variable expenses: 907,500 Variable cost of goods sold Variable selling and adniniatrative 200 000495,000 s 295,000 412,500 Contribution margin Fixed expenses Pixed manufacturing overhead Fixed selling and administrative 232,400 216,000448 Net operating loss 35,900) 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 Unite produced Units sold Variable costs per unit 28,000 25,000 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $ 7.10 $3.10 s 1.60 s 8.00