Tami Tyler opened Tamis Creations, Incorporated, 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 just completed a course in managerial accounting at State University. Tamis Creations, Incorporated Income Statement For the Quarter Ended March 31 Sales (28,200 units) $ 1,128,000 Variable expenses: Variable cost of goods sold $ 442,740 Variable selling and administrative 188,940 631,680 Contribution margin 496,320 Fixed expenses: Fixed manufacturing overhead $ 249,600 Fixed selling and administrative 258,720 508,320 Net operating loss ($12,000) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she hoped to use the statement as support for a bank loan. Another friend, a CPA, insists the company should be using absorption costing rather than variable costing and claims if absorption costing had been used, the company probably would have reported a profit for the quarter.

At this point, Ms. Tyler makes only one producta swimsuit. Production and cost data for the first quarter follow:

Units produced	31,200
Units sold	28,200
Variable costs per unit:
Direct materials	$ 7.20
Direct labor	$ 6.60
Variable manufacturing overhead	$ 1.90
Variable selling and administrative	$ 6.70

Required:

1. Complete the following:
   1. Compute the unit product cost under absorption costing.
   2. What is the companys absorption costing net operating income (loss) for the quarter?
   3. Reconcile the variable and absorption costing net operating income (loss) figures.
2. During the second quarter of operations, the company again produced 31,200 units but sold 34,200 units. (Assume no change in total fixed costs.)
   1. What is the companys variable costing net operating income (loss) for the second quarter?
   2. What is the companys absorption costing net operating income (loss) for the second quarter?
   3. Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter.