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 (28,900 units)		$ 1,156,000
Variable expenses:
Variable cost of goods sold	$ 491,300
Variable selling and administrative	202,300	693,600
Contribution margin		462,400
Fixed expenses:
Fixed manufacturing overhead	$ 255,200
Fixed selling and administrative	219,200	474,400
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	31,900
Units sold	28,900
Variable costs per unit:
Direct materials	$ 7.60
Direct labor	$ 7.60
Variable manufacturing overhead	$ 1.80
Variable selling and administrative	$ 7.00

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 31,900 units but sold 34,900 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.