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 $1,132,000 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,300 units) Variable expenses Variable cost of goods sold $ 438,650 Variable selling and administrative 198, 100 Contribution margin Fixed expenses! Fixed manufacturing overhead 266,400 Fixed selling and administrative Net operating loss 636, 750 495,250 515.250 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 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: 33. 300 28,300 $ 7.30 Units produced Unite sold Variable costs per uniti Direct materiale Direct labor Variable manufacturing overhead Variable selling and administrative $1.60