Tami Tyler opened Tamiâs Creations, Inc., 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. Tylerâs 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.
Tamiâs Creations, Inc.
Income Statement
For the Quarter Ended March 31
Sales (23,000 units) $ 834,900 Variable expenses: Variable cost of goods sold $ 271,400 Variable selling and administrative 177,100 448,500 Contribution margin 386,400 Fixed expenses: Fixed manufacturing overhead 213,200 Fixed selling and administrative 220,000 433,200 Net operating loss $ ( 46,800)
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 productâa swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:
Units produced 26,000 Units sold 23,000 Variable costs per unit: Direct materials $ 7.20 Direct labor $ 3.00 Variable manufacturing overhead $ 1.60 Variable selling and administrative $ 7.70
Required:
1. Complete the following:
a. Compute the unit product cost under absorption costing.
b. What is the companyâs 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 26,000 units but sold 29,000 units. (Assume no change in total fixed costs.)
a. What is the companyâs variable costing net operating income (loss) for the second quarter?
b. What is the companyâs 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.
Tami Tyler opened Tamiâs Creations, Inc., 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. Tylerâs 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.
| Tamiâs Creations, Inc. Income Statement For the Quarter Ended March 31 | ||||||
| Sales (23,000 units) | $ | 834,900 | ||||
| Variable expenses: | ||||||
| Variable cost of goods sold | $ | 271,400 | ||||
| Variable selling and administrative | 177,100 | 448,500 | ||||
| Contribution margin | 386,400 | |||||
| Fixed expenses: | ||||||
| Fixed manufacturing overhead | 213,200 | |||||
| Fixed selling and administrative | 220,000 | 433,200 | ||||
| Net operating loss | $ | ( 46,800) | ||||
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 productâa swimsuit. Production and cost data relating to the swimsuit for the first quarter follow:
| Units produced | 26,000 | |||
| Units sold | 23,000 | |||
| Variable costs per unit: | ||||
| Direct materials | $ | 7.20 | ||
| Direct labor | $ | 3.00 | ||
| Variable manufacturing overhead | $ | 1.60 | ||
| Variable selling and administrative | $ | 7.70 | ||
Required:
1. Complete the following:
a. Compute the unit product cost under absorption costing.
b. What is the companyâs 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 26,000 units but sold 29,000 units. (Assume no change in total fixed costs.)
a. What is the companyâs variable costing net operating income (loss) for the second quarter?
b. What is the companyâs 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.
Related questions
Tami Tyler opened Tamiâs Creations, Inc., a small manufacturingcompany, at the beginning of the year. Getting the company throughits first quarter of operations placed a considerable strain on Ms.Tylerâs personal finances. The following income statement for thefirst quarter was prepared by a friend who has just completed acourse in managerial accounting at State University. |
Tamiâs Creations, Inc. | ||||
| Sales (23,000units) | $ | 834,900 | ||
| Variableexpenses: | ||||
| Variable cost of goods sold | $ | 282,900 | ||
| Variable selling andadministrative | 184,000 | 466,900 | ||
| Contributionmargin | 368,000 | |||
| Fixed expenses: | ||||
| Fixed manufacturing overhead | 213,200 | |||
| Fixed selling and administrative | 220,000 | 433,200 | ||
| Net operatingloss | $ | ( 65,200) | ||
Ms. Tyler is discouraged over the lossshown for the quarter, particularly because she had planned to usethe statement as support for a bank loan. Another friend, a CPA,insists that the company should be using absorption costing ratherthan variable costing and argues that if absorption costing hadbeen used the company would probably have reported at least someprofit for the quarter. |
At this point, Ms. Tyler is manufacturing only one product, aswimsuit. Production and cost data relating to the swimsuit for thefirst quarter follow: |
| Units produced | 26,000 | |
| Units sold | 23,000 | |
| Variable costs perunit: | ||
| Direct materials | $ | 7.60 |
| Direct labor | $ | 2.90 |
| Variable manufacturing overhead | $ | 1.80 |
| Variable selling andadministrative | $ | 8.00 |
| 3. | During the second quarter of operations, the company againproduced 26,000 units but sold 29,000 units. (Assume no change intotal fixed costs.) |
| a. | Prepare a contribution format income statement for the quarterusing variable costing. (Round your intermediatecalculations to 2 decimal places.) |
| b. | Prepare an income statement for the quarter using absorptioncosting. (Round your intermediate calculations to 2 decimalplaces.) |
| c. | Reconcile the variable costing and absorption costing netoperating incomes. (Round your intermediate calculations to2 decimal places.) |
Tami Tyler opened Tamiâs Creations, Inc., a small manufacturingcompany, at the beginning of the year. Getting the company throughits first quarter of operations placed a considerable strain on Ms.Tylerâs personal finances. The following income statement for thefirst quarter was prepared by a friend who has just completed acourse in managerial accounting at State University. |
Tamiâs Creations, Inc. | ||||
| Sales (23,000units) | $ | 834,900 | ||
| Variableexpenses: | ||||
| Variable cost of goods sold | $ | 282,900 | ||
| Variable selling andadministrative | 184,000 | 466,900 | ||
| Contributionmargin | 368,000 | |||
| Fixed expenses: | ||||
| Fixed manufacturing overhead | 213,200 | |||
| Fixed selling and administrative | 220,000 | 433,200 | ||
| Net operatingloss | $ | ( 65,200) | ||
Ms. Tyler is discouraged over the lossshown for the quarter, particularly because she had planned to usethe statement as support for a bank loan. Another friend, a CPA,insists that the company should be using absorption costing ratherthan variable costing and argues that if absorption costing hadbeen used the company would probably have reported at least someprofit for the quarter. |
At this point, Ms. Tyler is manufacturing only one product, aswimsuit. Production and cost data relating to the swimsuit for thefirst quarter follow: |
| Units produced | 26,000 | |
| Units sold | 23,000 | |
| Variable costs perunit: | ||
| Direct materials | $ | 7.60 |
| Direct labor | $ | 2.90 |
| Variable manufacturing overhead | $ | 1.80 |
| Variable selling andadministrative | $ | 8.00 |
| Required: |
| 1. | Complete the following: |
| a. | Compute the unit product cost under absorption costing.(Round your intermediate and final answers to 2 decimalplaces.) |
| b. | Redo the companyâs income statement for the quarter usingabsorption costing. (Round your intermediate calculationsto 2 decimal places.) |
| c. | Reconcile the variable and absorption costing net operatingincome (loss) figures. (Round your intermediatecalculations to 2 decimal places.) |
| 3. | During the second quarter of operations, the company againproduced 26,000 units but sold 29,000 units. (Assume no change intotal fixed costs.) |
| a. | Prepare a contribution format income statement for the quarterusing variable costing. (Round your intermediatecalculations to 2 decimal places.) |
| b. | Prepare an income statement for the quarter using absorptioncosting. (Round your intermediate calculations to 2 decimalplaces.) |
| c. | Reconcile the variable costing and absorption costing netoperating incomes. (Round your intermediate calculations to2 decimal places.) |
***The last person who answered, did not answer the questions in format. Please provide the answers for the required fields on the chart. Label the answers please or list them in a chart like the ones provided in the question.***
*CHECK NUMBERS; PLEASE PROVIDE AN EXPLAINATION FOR EACH AND ANSWER EACH PART FOR QUESTIONS #1-#3 WITH FORMULAS*
Tami Tyler opened Tamiâs Creations, Inc., 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. Tylerâs 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.
| Tamiâs Creations, Inc. Income Statement For the Quarter Ended March 31 | |||||||
| Sales (22,000 units) | $ | 798,600 | |||||
| Variable expenses: | |||||||
| Variable cost of goods sold | $ | 257,400 | |||||
| Variable selling and administrative expenses | 176,000 | 433,400 | |||||
| Contribution margin | 365,200 | ||||||
| Fixed expenses: | |||||||
| Fixed manufacturing overhead | 202,500 | ||||||
| Fixed selling and administrative expenses | 218,000 | 420,500 | |||||
| Net operating loss | $ | ( 55,300 | ) | ||||
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 | 25,000 | ||
| Units sold | 22,000 | ||
| Variable costs per unit: | |||
| Direct materials | $ | 7.20 | |
| Direct labor | $ | 2.70 | |
| Variable manufacturing overhead | $ | 1.80 | |
| Variable selling and administrative | $ | 8.00 | |
Required:
1. Complete the following:
a. Compute the unit product cost under absorption costing. (Round your intermediate and final answers to 2 decimal places.)
Unit Product Cost:_______________
b. Redo the companyâs income statement for the quarter using absorption costing. (Round your intermediate calculations to 2 decimal places.)
| |||||||||||||||||||
+
c. Reconcile the variable and absorption costing net operating income (loss) figures. (Round your intermediate calculations to 2 decimal places.)
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+
3. During the second quarter of operations, the company again produced 25,000 units but sold 28,000 units. (Assume no change in total fixed costs.)
a. Prepare a contribution format income statement for the quarter using variable costing. (Round your intermediate calculations to 2 decimal places.)
| ||||||||||||||||||||||||||||||||||||||||||||||||||
+
b. Prepare an income statement for the quarter using absorption costing. (Round your intermediate calculations to 2 decimal places.)
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+
c. Reconcile the variable costing and absorption costing net operating incomes. (Round your intermediate calculations to 2 decimal places.)
| Reconciliation of Variable Costing and Absorption Costing Net Operating Incomes (Losses) | ||
| Variable costing net operating income (loss) | ||
| Absorption costing net operating income (loss) | ||
