Required:1. Complete the following:a. Compute the unit product cost under absorption costing.b. What is the company's absorption costing net operating income (loss) for the quarter?c. Reconcile the variable and absorption costing net operating income (loss) figures.3. During the second quarter of operations, the company again produced 31,200 units but sold 34,200 units. (Assume no change intotal fixed costs.)a. What is the company's variable costing net operating income (loss) for the second quarter?b. What is the company's absorption costing net operating income (loss) for the second quarter?c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter. Tami Tyler opened Tami's Creations, Incorporated, a small manufacturing company, at the beginning of the year. Getting the companythrough its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement forthe first quarter was prepared by a friend who has just completed a course in managerial accounting at State University.Tami's Creations, IncorporatedIncome StatementFor the Quarter Ended March 31Sales (28,200 units)Variable expenses:Variable cost of goods soldVariable selling and administrativeContribution marginFixed expenses:Fixed manufacturing overheadFixed selling and administrativeNet operating lossUnits producedUnits sold$ 490,680180, 480Variable costs per unit:Direct materialsDirect labor249,600219, 240Variable manufacturing overheadVariable selling and administrativeMs. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support fora bank loan. Another friend, a CPA, insists that the company should be using absorption costing rather than variable costing andargues 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 swimsuit. Production and cost data relating to the swimsuit for the firstquarter follow:$ 1,128,00031, 20028, 200671, 160456, 840$ 7.40$ 8.10$ 1.90$ 6.40468,840$ (12,000)

Absorption and variable costing are two main methods to assign cost to produced goods and services.…

Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile the variable and absorption costing net operating income (loss) figures.

Required: 1. Complete the following: a. Compute the unit product cost under absorption costing. b. What is the company's absorption costing net operating income (loss) for the quarter? c. Reconcile the variable and absorption costing net operating income (loss) figures.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Required:
1. Complete the following:
a. Compute the unit product cost under absorption costing.
b. What is the company's absorption costing net operating income (loss) for the quarter?
c. Reconcile the variable and absorption costing net operating income (loss) figures.
3. During the second quarter of operations, the company again produced 31,200 units but sold 34,200 units. (Assume no change in
total fixed costs.)
a. What is the company's variable costing net operating income (loss) for the second quarter?
b. What is the company's absorption costing net operating income (loss) for the second quarter?
c. Reconcile the variable costing and absorption costing net operating incomes for the second quarter.

Tami Tyler opened Tami's 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. 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.
Tami's Creations, Incorporated
Income Statement
For the Quarter Ended March 31
Sales (28,200 units)
Variable expenses:
Variable cost of goods sold
Variable selling and administrative
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative
Net operating loss
Units produced
Units sold
$ 490,680
180, 480
Variable costs per unit:
Direct materials
Direct labor
249,600
219, 240
Variable manufacturing overhead
Variable selling and administrative
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 swimsuit. Production and cost data relating to the swimsuit for the first
quarter follow:
$ 1,128,000
31, 200
28, 200
671, 160
456, 840
$ 7.40
$ 8.10
$ 1.90
$ 6.40
468,840
$ (12,000)

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