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 (28,100 units)		$ 1,124,000
Variable expenses:
Variable cost of goods sold	$ 452,410
Variable selling and administrative	177,030	629,440
Contribution margin		494,560
Fixed expenses:
Fixed manufacturing overhead	279,900
Fixed selling and administrative	228,160	508,060
Net operating loss		$ (13,500)

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	31,100
Units sold	28,100
Variable costs per unit:
Direct materials	$ 7.30
Direct labor	$ 6.80
Variable manufacturing overhead	$ 2.00
Variable selling and administrative	$ 6.30

REQUIRED: 1) Reconcile the variable and absorption costing net operating income (loss) figures. (Losses and deductions should be entered as a negative.) Reconcile the variable and absorption costing net operating income (loss) figures. (Losses and deductions should be entered as a negative.)

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income (loss)
Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing
Absorption costing net operating income (loss)	$13,500

2) During the second quarter of operations, the company again produced 31,100 units but sold 34,100 units. What is the companys variable costing net operating income (loss) for the second quarter?

Tamis Creations, Incorporated
Variable Costing Income Statement
Sales
Variable expenses:
Variable cost of goods sold
Variable selling and administrative
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative
Net operating income (loss)

3) During the second quarter of operations, the company again produced 31,100 units but sold 34,100 units. What is the companys absorption costing net operating income (loss) for the second quarter? (Round your intermediate calculations to 2 decimal places.)

Tamis Creations, Incorporated
Absorption Costing Income Statement
	Total
	0
Net operating income (loss)

4) During the second quarter of operations, the company again produced 31,100 units but sold 34,100 units. Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter. (Losses and deductions should be entered as a negative.)

Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes
Variable costing net operating income (loss)
Absorption costing net operating income (loss)