Please help, please show your work. Thank you Tami Tyler opened Tami\'s Creation
ID: 2569788 • Letter: P
Question
Please help, please show your work. Thank you
Tami Tyler opened Tami's 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. 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, Inc. Income Statement For the Quarter Endeci March 31 Sales (22,000 units) $ 798.600 Variable expenses: Variable cost of goods sold S 266,200 Variable: selling and administrative expenses 170,500 436 700 Contribution margin 361,900 Fixed expenses: Fixed manufacturing overhead 207,500 Fixed seling and administrative expenses 217.000 424.500 Net operating loss $ (62 500) 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; 25 000 22.000 Units produced Units sold Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 7.10 310 1.90 7.75 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 $20.40 b. Redo the company's income statement for the quarter using absorption costing. (Round your intermediate calculations to 2 decimal places.) Tami's Creations, Inc. Absorption Costing Income Statement Total Sales 798.600 Cost of goods sold 448,800 Grogs margin 349,800 Selling and ediministrative expenses 387,500 Net operating income (loss) $ (37 700)Explanation / Answer
3a) Variable costing income statement Sales (28000*36.30 1016400 Variable expenses: Variable cost of goods sold 338800 Variable selling & administative expense 217000 555800 contribution margin 460600 Fixed expenses Fixed manufacturing overhead 207,500 Fixed selling & administrative expense 217,000 424,500 Net operating income 36,100 b) Absorption costing income statement sales 1,016,400 cost of goods sold(12.1+8.3) 571200 Gross margin 445,200 Selling & adm expense (217000 + 28000*7.75) 434000 net operating income 11,200 c) Variable costing net operating income (loss) 36,100 less:fixed manufacturing overhead cost released in inventory(3000*8.3) -24900 Absorption costing net operating income 11,200