Diego Company manufactures one product that is sold for $80 per unit. The following information pertains to the companys first year of operations in which it produced 40,000 units and sold 35,000 units.

Variable costs per unit:
Manufacturing:
Direct materials	$24
Direct labour	$14
Variable manufacturing overhead	$2
Variable selling and administrative	$4
Fixed costs per year:
Fixed manufacturing overhead	$800,000
Fixed selling and administrative expenses	$496,000

Required:

Answer each question independently based on the original data unless instructed otherwise.

1. What is the unit product cost under variable costing?
2. What is the unit product cost under absorption costing?
3. What is the companys total contribution margin under variable costing?
4. What is the companys net operating income under variable costing?
5. What is the companys total gross margin under absorption costing?
6. What is the companys net operating income under absorption costing?
7. What is the companys break-even point in unit sales? Is it above or below the actual sales volume? Compare the break-even sales volume to your answer for question 6 and comment.
8. What is the CM ratio under variable costing?