Tam 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. Sales (28,700 units) Variable expenses: Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overheal Fixed selling and administrative Net operating loss Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 Units produced Uits sold Variable costs per unit: Direct materials Direct labor $ 467,810 192, 290 285,300 216,100 Variable manufacturing overhead Variable selling and administrative 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 smmsut Production and cost data relating to the swimsut for the first quarter follow $1,148,000 31,700 28,700 660,100 487,900 $ 7,40 $7.10 $ 1.00 $6.30 501,400 $ (13,500) 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 (oss) figures 3. During the second quarter of operations, the company again produced 31700 units but sold 34700 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 foss for the second quarter? c. Reconcile the variable costing and absorption costing net operating incomes losses) for the second quarter
Tam 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. Sales (28,700 units) Variable expenses: Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overheal Fixed selling and administrative Net operating loss Tami's Creations, Incorporated Income Statement For the Quarter Ended March 31 Units produced Uits sold Variable costs per unit: Direct materials Direct labor $ 467,810 192, 290 285,300 216,100 Variable manufacturing overhead Variable selling and administrative 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 smmsut Production and cost data relating to the swimsut for the first quarter follow $1,148,000 31,700 28,700 660,100 487,900 $ 7,40 $7.10 $ 1.00 $6.30 501,400 $ (13,500) 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 (oss) figures 3. During the second quarter of operations, the company again produced 31700 units but sold 34700 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 foss for the second quarter? c. Reconcile the variable costing and absorption costing net operating incomes losses) for the second quarter
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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