Tami Tyler opened Tamis 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. Tylers 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.

Tamis Creations, Inc. Income Statement For the Quarter Ended March 31

Sales (24,000 units)

$

871,200

Variable expenses:

Variable cost of goods sold

$

295,200

Variable selling and administrative

187,200

482,400

Contribution margin

388,800

Fixed expenses:

Fixed manufacturing overhead

226,800

Fixed selling and administrative

216,000

442,800

Net operating loss

$

( 54,000)

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 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:

Units produced		27,000
Units sold		24,000
Variable costs per unit:
Direct materials	$	7.50
Direct labor	$	3.00
Variable manufacturing overhead	$	1.80
Variable selling and administrative	$	7.80

3.	During the second quarter of operations, the company again produced 27,000 units but sold 30,000 units. (Assume no change in total fixed costs.)

a.	Prepare a contribution format income statement for the quarter using variable costing. (Round your intermediate calculations to 2 decimal places.)

Tami's Creations, Inc Variable Costing Income Statement Sales Variable expenses: Variable cost of goods sold Variable selling and administrative Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative G Net operating income