the first quarter was prepared by a friend who just completed a course in managerial accounting at State University.

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 product$-$a swimsuit. Production and cost data for the first quarter follow:

$\backslash$table$[[$Units produced,$31,600],[$Units sold,$28,600],[$Variable costs per unit:,$],[$Direct materials,$$6\mathrm{.}00$