Question
Here is all of the information to answer questions 13, 14, 15. I have asked this already and recieved wrong answers to those questions. Thank
Here is all of the information to answer questions 13, 14, 15. I have asked this already and recieved wrong answers to those questions. Thank you for your help in this matter.
The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $73 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 44,000 units and sold 39,000 units. Variable costs per unit: Manufacturing: Direct materials $ 23 Direct labor $ 16 Variable manufacturing overhead $ 2 Variable selling and administrative $ 4 Fixed costs per year: Fixed manufacturing overhead $ 748,000 Fixed selling and administrative expenses $ 400,000 The company sold 29,000 units in the East region and 10,000 units in the West region. It determined that $180,000 of its fixed selling and administrative expenses is traceable to the West region, $130,000 is traceable to the East region, and the remaining $90,000 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. Required:
1. What is the unit product cost under variable costing? $41
2. What is the unit product cost under absorption costing? $58
3. What is the companys total contribution margin under variable costing? $1,092,000
4. What is the companys net operating income (loss) under variable costing? $56,000
5. What is the companys total gross margin under absorption costing? $585,000
6. What is the companys net operating income (loss) under absorption costing? net operating income $ 29,000
7. | What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? (56,000), 85,000, 29,000 |
8.
1. | What is the companys break-even point in unit sales? 41,000 units |
2. | Is it above or below the actual sales volume? | ||||
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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? 41,000 units |
10. | What would have been the companys variable costing net operating income (loss) if it had produced and sold 39,000 units? |
Net operating loss (56,000) Units
11. | What would have been the companys absorption costing net operating income (loss) if it had produced and sold 39,000 units? Net operating loss 56,000 |
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 net operating income in Year 2? |
lower
13. | Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. |
Total East West
Sales |
Variable Expenses
Contribution Margin
Traceable fixed expenses
Region Segment Margin
Common Fixed Expense Not traceable to Region
Net Operating Loss
14. | Diego is considering eliminating the West region because an internally generated report suggests the regions total gross margin in the first year of operations was $30,000 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? it will Decrease by?
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