Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Diego Company manufactures one product that is sold for $71 per unit in two geographic regionsthe East and West regions. The following information pertains to

Diego Company manufactures one product that is sold for $71 per unit in two geographic regionsthe East and West regions. The following information pertains to the companys first year of operations in which it produced 42,000 units and sold 37,000 units.

Variable costs per unit:
Manufacturing:
Direct materials $ 21
Direct labor $ 12
Variable manufacturing overhead $ 3
Variable selling and administrative $ 5
Fixed costs per year:
Fixed manufacturing overhead $ 840,000
Fixed selling and administrative expense $ 330,000

The company sold 27,000 units in the East region and 10,000 units in the West region. It determined that $160,000 of its fixed selling and administrative expense is traceable to the West region, $110,000 is traceable to the East region, and the remaining $60,000 is a common fixed expense. 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.

Required:

1. What is the unit product cost under variable costing?

2. What is the unit product cost under absorption costing?

4. What is the companys net operating income (loss) under variable costing?

5. What is the companys total gross margin under absorption costing?

11. What would have been the companys absorption costing net operating income (loss) if it had produced and sold 37,000 units? You do not need to perform any calculations to answer this question.

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

Recommended Textbook for

Foundations Of Financial Markets And Institutions

Authors: Frank J. Fabozzi, Franco Modigliani, Michael G. Ferri

2nd Edition

0136860567, 9780136860563

More Books

Students also viewed these Finance questions

Question

If the person is a professor, what courses do they teach?

Answered: 1 week ago