Taml Tyler opened Tami's Creations, Inc., 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. 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. $762,300 Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (21,000 units) Variable expenses: Variable cost of goods sold $249,900 Variable selling and administrative 166,950 Contribution margin Fixed expenses: Fixed manufacturing overhead 194,400 Fixed selling and administrative 219,000 Net operating loss 416,850 345,450 413,400 $( 67,950) 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 would probably have reported a profit for the quarter At this point, Ms. Tyler is manufacturing only one product, a swimsuit. Production and cost data relating to the swimsuit for the first quarter follow: 24,000 21,000 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative $760 $2.60 $1.70 $7.95 Requirement 1: Complete the following: (a) Compute the unit product cost under absorption costing. (Round fixed manufacturing overhead rato per unit and final answer to 2 decimal places. Omit the "$" sign in your response.) Unit product cost (b) Redo the company's income statement for the quarter using absorption costing. (Do not round Intermediate calculations. Input all amount as positive value except net loss which should be Indicated with a minus sign. Round fixed manufacturing overhead rate per unit to 2 decimal places and final answer to the nearest whole dollar. Omit the "S" sign in your response.) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (c) Reconcile the variable and absorption costing net operating income (loss) figures. (Do not round intermediate calculations. Net losses should be indicated with a minus sign. Round fixed manufacturing overhead rate per unit to 2 decimal places and final answer to the nearest whole dollar. Omit the "$" sign in your response.) (Click to select) (Click to select) : Fixed manufacturing overhead cost deferred in inventory under absorption costing (Click to select) Requirement 2: Under absorption costing, did the company earn a profit for the quarter? O No o Yes Requirement 3: During the second quarter of operations, the company again produced 24,000 units but sold 27,000 units. (Assume no change in total fixed costs.) (a) Prepare a contribution format income statement for the quarter using variable costing. (Do not round per unit rates. Input all amount as positive value except net loss which should be indicated with a minus sign. Omit the "S" sign in your response.) Sales Variable expenses: Variable cost of goods sold Variable selling and administrative expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative expense (Click to select) (b)Prepare an income statement for the quarter using absorption costing. (Do not round Intermediate calculations. Input all amount as positive value except net loss which should be indicated with a minus sign. Round fixed manufacturing overhead rato per unit to 2 decimal places and final answer to the nearest whole dollar. Omit the "S" sign in your response.) (Click to select) (Click to select) (Click to select) (Click to select) (Click to select) (c) Reconcile the variable costing and absorption costing net operating incomes. (Do not round Intermediate calculations. Not losses should be indicated with a minus sign. Amount to be deducted should be indicated with a minus sign. Round fixed manufacturing overhead rate per unit to 2 decimal places and final answer to the nearest whole dollar. Omit the "$" sign in your response.) (Click to select) (Click to select) Fixed manufacturing overhead cost released from inventory under absorption costing (Click to select) pula la la la
