Problem 4-23 (Algo) Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO4-1, LO4-2, L04-3] 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. Sales (28,400 units) Variable expenses: Variable cost of goods sold Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating loss Units produced Units sold Variable costs per unit: Direct materials Direct labor $423,160 193,120 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. 3. During the 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. 282,600 250,620 31,400 28,400 $ 1,136,000 $7.30 $ 5.70 $ 1.90 $ 6.80 616,280 519,720 533,220 $(13,500) 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.
Problem 4-23 (Algo) Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO4-1, LO4-2, L04-3] 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. Sales (28,400 units) Variable expenses: Variable cost of goods sold Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating loss Units produced Units sold Variable costs per unit: Direct materials Direct labor $423,160 193,120 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. 3. During the 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. 282,600 250,620 31,400 28,400 $ 1,136,000 $7.30 $ 5.70 $ 1.90 $ 6.80 616,280 519,720 533,220 $(13,500) 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.
Cornerstones of Cost Management (Cornerstones Series)
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Author:Don R. Hansen, Maryanne M. Mowen
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Chapter16: Cost-volume-profit Analysis
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![Problem 4-23 (Algo) Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO4-1,
LO4-2, L04-3]
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.
Sales (28,400 units)
Variable expenses:
Variable cost of goods sold
Tami's Creations, Incorporated
Income Statement
For the Quarter Ended March 31
Variable selling and administrative
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative
Net operating loss
Units produced
Units sold
Variable costs per unit:
Direct materials
Direct labor
$423,160
193,120
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.
3. During the
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.
282,600
250,620
31,400
28,400
$ 1,136,000
$7.30
$ 5.70
$ 1.90
$ 6.80
616,280
519,720
533,220
$(13,500)
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fafc9af5d-13d5-4a21-b936-a9fd4e463914%2F05514837-96f5-418e-81f3-582b2f3ef903%2Fxufcprv_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 4-23 (Algo) Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO4-1,
LO4-2, L04-3]
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.
Sales (28,400 units)
Variable expenses:
Variable cost of goods sold
Tami's Creations, Incorporated
Income Statement
For the Quarter Ended March 31
Variable selling and administrative
Contribution margin
Fixed expenses:
Fixed manufacturing overhead
Fixed selling and administrative
Net operating loss
Units produced
Units sold
Variable costs per unit:
Direct materials
Direct labor
$423,160
193,120
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.
3. During the
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.
282,600
250,620
31,400
28,400
$ 1,136,000
$7.30
$ 5.70
$ 1.90
$ 6.80
616,280
519,720
533,220
$(13,500)
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.
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