Please use the provided excel upload The foundation 15 . 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 amount of the difference between the variable costing and absorption costing net operating incomes? What is the cause of this difference? 8. 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 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 10. What would have been the companys variable costing net operating income if it had produced and sold 35,000 units? You do not need to perform any calculations to answer this question 11 What would have been the companys absorption costing net operating income if it had produced and sold 35,00 units? You do not need to perform any calculations to answer this question 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 13 Prepare a contribution format segmented income statement that include a Total column and columns fr the east and west regions 14. Deigo is considering eliminating the West region because an internally generated report suggest the regions total gross margin in the first year of operations was $50,000 less than its traceable fixed selling and administrative expenses. Diego believes that if it drops the West region, the East regions 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 impoact of dropping the West region in Year 2? 15. Assume the West region invest $30,000 in a new advertising campaign in year 2 that increases its unit sales by 20%. If all else remains constant, what would be the profit impact of pursuing the advertising campaign Ethics Challenge inventory January 1...........0 production..........................2400 sales.....................................2000 Inventory September 30.......400 Warehouse space up to 1000 units minimum inventory level that the division should carry is 50 units production must be at least 200 units per quarter in order to retain a nucleus of key employees. Max production capacity is 1500 units per quarter 1. Assume that the division is using variable costing. How many units should be scheduled for production during the last quarter of the year (he basic formula for computing the required production for a period in a company is expected sales + desired ending inventory-beginning inventory= Required production. Show computations and explain your answer Will the number of units scheduled for production affect the divisions reported income or loss for the year? Explain? 2. Assume that the division is using absorption costing and that the divisional manager is given an annual bonus based on divisional operating income. If Mr Cavalas wants to maximize his divisions operating income for the year, how many units should be scheduled for the production during the last quarter? See the formula in 1 Explain 3. Identify the ethical issues involved in the decision Mr cavalas must make about the level of production for the last quarter of the year.

Variable costs per unit Manufacturing: Direct Materials Direct Labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed selling and administrative expenses $24.00 $14.00 $2.00 $4.00 $800,000.00 $496,000.00 Absorption Variable costing costing 1-2 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost 3-4 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating gain (loss) 5-6 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income 7 Variable costing net operating income Add: fixed manufacturing overhead deferred in inventory under absorption costing Absorption costing net operating income 8 Profit = units per unit Unit CM X Q - Fixed expenses 9 10-11 Sales Variable expenses: Variable cost of goods sold Variable selling and administrative Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating gain (loss) 12 13 Total East Sales Variable expenses Contribution margin Traceable fixed expenses Region segment margin Common fixed expenses not traceable to regions Net operating gain (loss) 14 Foregone segment margin in the West region Additional contribution margin in the East region Increase (decrease) in profits if the West region is dropped 15. Additional advertising Additional contribution margin in the West region Increase in profits West 1 Desired Inventory, December 31 Expected sales, last quarter Total needs Less inventory, September 30 Required production units units units units units 2 Desired Inventory, December 31 Expected sales, last quarter Total needs Less inventory, September 30 Required production units units units units units 3