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Tami Tyler opened Tami's its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the first

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Tami Tyler opened Tami's 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 reations, Inc, a small manufacturing company, at the beginning of the year. Getting the company through Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (28,700 units) Variable expenses 1,148,000 Variable cost of goods sold Variable selling and administrative 470,680 Contribution nargin Fixed expensesi 671.380 200.900476,420 Pixed nanufacturing overhead Fixed selling and adninistrative213,680489,470 275,790 Net operating loss 13,050) 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 swimsuilt. Production and cost quarter follow data relating to the swimsut for the fins Unita produced Units sold 31,700 28,700 Variable costs per unit Direct naterials Direct labor Variable manufaoturing overhead Variable selling and adninistrative 7.40 s 7.00 s 2.00 s 7.00

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