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 just completed a course in managerial accounting at State University. Sales (28,500 units) variable expenses: Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating loss $ 1,140,000 $ 473,100 179,550 652,650 487,350 $ 283,500 217,350 500,850 $ ( 13,500) 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: Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Required: 1. Complete the following 31,500 28,500 $ 7.30 $ 7.50 $ 1.80 $ 6.30 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 31,500 units but sold 34,500 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 (losses) for the second quarter Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 1C Required 3A Required 3B Required 3C

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 just completed a course in managerial accounting at State University. Sales (28,500 units) variable expenses: Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating loss $ 1,140,000 $ 473,100 179,550 652,650 487,350 $ 283,500 217,350 500,850 $ ( 13,500) 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: Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Required: 1. Complete the following 31,500 28,500 $ 7.30 $ 7.50 $ 1.80 $ 6.30 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 31,500 units but sold 34,500 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 (losses) for the second quarter Complete this question by entering your answers in the tabs below. Required 1A Required 18 Required 1C Required 3A Required 3B Required 3C

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 41P: Shannon, Inc., has two divisions. One produces and sells paper party supplies (napkins, paper...

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