Diego Company manufactures one product that is sold for $70 per unit in two geographicregionsthe East and West regions. The following information pertains to the companys first

year of operations in which it produced 53,000 units and sold 48,000 units. Variable costs per unit: Manufacturing: Direct materials $ 21 Direct labor $ 10 Variable manufacturing overhead $ 2 Variable selling and administrative $ 4 Fixed costs per year: Fixed manufacturing overhead $ 1,060,000 Fixed selling and administrative expenses $557,000 The company sold 36,000 units in the East region and 12,000 units in the West region. It determined that $270,000 of its fixed selling and administrative expenses is traceable to the Westregion, $220,000 is traceable to the East region, and the remaining $67,000 is a common fixedcost. The company will continue to incur the total amount of its fixed manufacturing overheadcosts as long as it continues to produce any amount of its only product.

9. What is the amount of the difference between the variable costing and absorption costingnet operating incomes (losses)? 10. What would have been the companys variable costing net operating income (loss) if it had produced and sold 48,000 units?

11. What would have been the companys absorption costing net operating income (loss) if it

had produced and sold 48,000 units?

12. If the company produces 5,000 fewer units than it sells in its second year of operations,will absorption costing net operating income be higher or lower than variable costing netoperating income in Year 2?

Diego Company manufactures one product that is sold for $70 per unit in two geographic regions -the East and West regions. The following information pertains to the company's first year of operations in which it produced 53,000 units and sold 48,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead S 21 S 10 ariable selling and administrative Fixed costs per year Fixed manufacturing overhead S 1,060,000 Fixed selling and administrative expenses $557,000 The company sold 36,000 units in the East region and 12,000 units in the West region. It determined that $270,000 of its fixed selling and administrative expenses is traceable to the West region, $220,000 is traceable to the East region, and the remaining $67,000 is a common fixed cost. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce any amount of its only product