Diego Company manufactures one product that is sold for $80 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 40,000 units and sold 35,000 units.

Variable Costs Per Unit:
Manufacturing
Direct Materials	$24
Direct Labor	$14
Variable manufacturing overhead	$2
Variable selling and administrative	$4
Fixed Costs per year
Fixed manufacturing overhead	$800000
Fixed selling and administrative expenses	$496000

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

6. What is the companys net operating income (loss) under absorption costing?

7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? What is the cause of this difference?

8a. What is the companys break-even point in unit sales?

8b. Is it above or below the actual sales volume?

9. If the sales volumes in the East and West regions had been reversed, what would be the companys overall break-even point in unit sales?