Tami Tyler opened Tami\'s Creations, Inc., a small manufacturing company, at the

Question

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 Ended March 31 Sales (28,800 units) Variable expenses: $ 1,152,000 Variable cost of goods sold Variable selling and administrative 486,720 198,720 685,440 466,560 Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative 283,020 196,890 479,910 Net operating loss 13,350) 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

Explanation / Answer

Solution:

Computation of Unit Product Cost - Variable Costing Particulars Per unit Unit Product Cost: Direct material $7.50 Direct Labor $7.70 Variable manufacturing overhead $1.70 Unit product cost $16.90

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.