Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Diego company manufacture one product that is sold $78per unit in two geographic regions. the east and west regions, the following information pertains to the

Diego company manufacture one product that is sold $78per unit in two geographic regions. the east and west regions, the following information pertains to the companys first year of operation in which it produced 60000 units and sold 57000 units. variable cost per unit manufacturing: direct materials 28, drect labor 12, variable manufacturing overhead 2, variable selling and administrative 3 fixed cost per year: fixed manufacturing overhead 1260000, fixed selling and administrative expense 654000. the company sold 42000 units in the east region and 15000 units in the west region, it determined that 340000 of its fixed sellings and administrtive expense is traceable to the west region, 290000 is traceable to the east region and the remaining 24000 is a common fixed expense, the company will continue to incur the total amount of its fixed manufacturing overhead cost as long as it continues to produce any amount of its only product. H bok Int 13. Prepare a contribution format segmented income statement that includes a Total column and columns fo regions. ences Sales Variable expenses Contribution margin Traceable fixed expenses Region segment margin Net operating loss Income Statement Total East West Company $ 69 0 O 0 $ 69 0 0 0 $ 0 (Algo) 14. Diego is considering eliminating the West region because an internally generated report suggests the region's total gross margin in the first year of operations was $115,000 less than its traceable fixed selling and administrative expenses. Diego believes that if it drops the West region, the East region's sales will grow by 5% in Year 2. Using the contribution approach for analyzing segment profitability and assuming all else remains constant in Year 2, what would be the profit impact of dropping the West region in Year 2? Profit will by ces 15. Assume the West region invests $50,000 in a new advertising campaign in Year 2 that increases its unit sales by 20%. If all else remains constant, what would be the profit impact of pursuing the advertising campaign? Profit will by

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions