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 has just completed a course in managerial accounting at State University.

Tamis Creations, Incorporated Income Statement For the Quarter Ended March 31
Sales (28,900 units)		$ 1,156,000
Variable expenses:
Variable cost of goods sold	$ 491,300
Variable selling and administrative	199,410	690,710
Contribution margin		465,290
Fixed expenses:
Fixed manufacturing overhead	255,200
Fixed selling and administrative	222,090	477,290
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 producta swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:

Units produced	31,900
Units sold	28,900
Variable costs per unit:
Direct materials	$ 7.10
Direct labor	$ 8.00
Variable manufacturing overhead	$ 1.90
Variable selling and administrative	$ 6.90

1a.) What is the companys absorption costing net operating income (loss) for the quarter?

b.) Reconcile the variable and absorption costing net operating income (loss) figures:

\begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Tami's Creations, Incorporated } \\ \hline \multicolumn{2}{|c|}{ Absorption Costing Income Statement } \\ \hline Sales & Total \\ \hline Cost of goods sold & \\ \hline Gross margin & \\ \hline Selling and administrative expenses & \\ \hline Net operating income & $ \\ \hline \end{tabular} Reconcile the variable and absorption costing net operating income (loss) figures. (Losses and deductions should be as a negative.)