Problem 4-23 (Algo) Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO4-1, LO4-2, LO4-3] 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. Tami’s Creations, Incorporated Income Statement For the Quarter Ended March 31 Sales (28,700 units)   $ 1,148,000 Variable expenses:     Variable cost of goods sold $ 476,420   Variable selling and administrative 180,810 657,230 Contribution margin   490,770 Fixed expenses:     Fixed manufacturing overhead 285,300   Fixed selling and administrative 218,970 504,270 Net operating loss   $ ( 13,500) 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: Units produced 31,700 Units sold 28,700 Variable costs per unit:   Direct materials $ 7.50 Direct labor $ 7.30 Variable manufacturing overhead $ 1.80 Variable selling and administrative $ 6.30 Required: Complete the following: Compute the unit product cost under absorption costing. What is the company’s absorption costing net operating income (loss) for the quarter? Reconcile the variable and absorption costing net operating income (loss) figures. During the second quarter of operations, the company again produced 31,700 units but sold 34,700 units. (Assume no change in total fixed costs.) What is the company’s variable costing net operating income (loss) for the second quarter? What is the company’s absorption costing net operating income (loss) for the second quarter? Reconcile the variable costing and absorption costing net operating incomes (losses) for the second quarter.

Shannon, Inc., has two divisions. One produces and sells paper party supplies (napkins, paper plates, invitations); the other produces and sells cookware. A segmented income statement for the most recent quarter is given below: On seeing the quarterly statement, Madge Shannon, president of Shannon, Inc., was distressed and discussed her disappointment with Bob Ferguson, the companys vice president of finance. MADGE: The Party Supplies Division is killing us. Its not even covering its own fixed costs. Im beginning to believe that we should shut down that division. This is the seventh consecutive quarter it has failed to provide a positive segment margin. I was certain that Paula Kelly could turn it around. But this is her third quarter, and she hasnt done much better than the previous divisional manager. BOB: Well, before you get too excited about the situation, perhaps you should evaluate Paulas most recent proposals. She wants to spend 10,000 per quarter for the right to use familiar cartoon figures on a new series of invitations, plates, and napkins and at the same time increase the advertising budget by 25,000 per quarter to let the public know about them. According to her marketing people, sales should increase by 10 percent if the right advertising is doneand done quickly. In addition, Paula wants to lease some new production machinery that will increase the rate of production, lower labor costs, and result in less waste of materials. Paula claims that variable costs will be reduced by 30 percent. The cost of the lease is 95,000 per quarter. Upon hearing this news, Madge calmed considerably and, in fact, was somewhat pleased. After all, she was the one who had selected Paula and had a great deal of confidence in Paulas judgment and abilities. Required: 1. Assuming that Paulas proposals are sound, should Madge Shannon be pleased with the prospects for the Party Supplies Division? Prepare a segmented income statement for the next quarter that reflects the implementation of Paulas proposals. Assume that the Cookware Divisions sales increase by 5 percent for the next quarter and that the same cost relationships hold. 2. Suppose that everything materializes as Paula projected except for the 10 percent increase in salesno change in sales revenues takes place. Are the proposals still sound? What if the variable costs are reduced by 40 percent instead of 30 percent with no change in sales?

not use ai please

Homework help. Chapter 25, number 3. Need help filling in the blanks. Thank you!