Problem 6-23 Absorption and Variable Costing; Production Constant, Sales Fluctuate [LO6-1, LO6-2, O6-3] Tami Tyler opened Tami's Creations, Inc., a small manufacturing company, at the beginning of the year. Getting the company throus its first quarter of operations placed a considerable strain on Ms. Tyler's personal finances. The following income statement for the quarter was prepared by a friend who has just completed a course in managerial accounting at State University Tami's Creations, Inc. Income Statement For the Quarter Ended March 31 Sales (22,800 units) Variable expensess $ 798,600 Variable cost of goods sold Varlable selling and administrative 5 268,400 Contribution margirn Fixed expenses: 179,500438,900 59,708 Fixed manufacturing overhead Fixed selling and administrative 207,500 218,000425 500 s (65,80e) Net operating loss Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support 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 At this point, Ms. Tyler is manufacturing only one product-a swimsuit Production and cost data relating to the swimsuit for the fir quarter follow Units produced Units sold Variable costs per unit: 25,000 22,000 Direct materials $ 7.30 3.00 1.99 7.75 Direct labor Variable manufacturing overhead Variable selling and adminstrative 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 25,000 units but sold 28,000 units. (Assume no chang 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