Tami Tyler opened a small manufacturing company called Tami's Creations, Incorporated at the beginning of the year. The first quarter operations placed a strain on her finances and showed a loss. A friend who took an accounting course insists the company should be using absorption costing instead of variable costing, which may have shown a profit. The company currently makes one product, swimsuits. Production and cost data for quarter one are provided.

1. 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. 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 varlable 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: 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. Beconcile 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 quarten? c. Reconcile the variable costing and absorption costing net
operating incomes (losses) for the second quartec. Compute the unit product cost under
absorption costing. (Round your answer to 2 decimal pla What is the company's absorption
costing net operating income (loss) for the quarter? (Round to 2 decimal places.) Reconcile the
variable and absorption costing net operating income (loss) figures. (Losses and deductions
should be entered as a negative.) 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.) What is the
company's variable costing net operating income (loss) for the second quarter? (Round your
intermediate calculations to 2 decimal places.) During the second quarter of operations, the
company again produced 31,500 units but soid 34,500 units, (Assume no change in total fixed
costs.) What is the company's absorption costing net operating income (loss) for the second
quarter? (Round your intermediate calculations to 2 decimal places.) 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.) Reconcile the variable costing and absorption costing net operating
incomes (losses) for the second quarter. (Losses and deductions should be entered as a negative.)