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Chec Problem 6-23 Absorption and Variable Costing: Production Constant, Sales Fluctuate [LO6-1, L062, LO6-3] Tami's Creations, Inc, a small manufacturing company, at the beginning of the year. Getting the company through ts 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 occounting at State University Book Tami's Creations Incone Statement the puarter Ended March rences Sales (28, 3e9 units) Varlable expenses : s 1,132,000 Varlable cost of goods sold Variable selling and administrative- 196,685 444,318 64,995 Contribution margin Fixed expenses Pixed sanufacturing overhead Fixed selling and administrative 269, 180 Net operating loss 12,900) Ms. Tyler is discouraged over the loss shown for the quarter, particularly because she had planned to use the statement as support for 0 bank loan Another friend, CPA, insists that the company should be using absorption costing rather than veriable costing and orgues that if absorption costing hed 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-s swimsuit Production and cost data relating to the swimsuit for the irst quenter follow 31,300 1 of 2Next>

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