Required information Required information

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Diego Company manufactures one product that is sold for $$77$ per unit in two geographic regions$-$the East and West

regions. The following information pertains to the company's first year of operations in which it produced $48,000$ units and

sold $43,000$ units.Manufacturing: Direct labor $ $12$Variable selling and administrative $$5$

Fixed costs per year:Fixed selling and administrative expense $ $456,000$The company sold $33,000$ units in the East region and $10,000$ units in the West region. It determined that $$220,000$ of its

fixed selling and administrative expense is traceable to the West region, $$170,000$ is traceable to the East region, and the

remaining $$66,000$ 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.

Diego is considering eliminating the West region because an internally generated report suggests the region's 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 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 $2?$ Required information

$[$The following information applies to the questions displayed below.$]$

Diego Company manufactures one product that is sold for $$77$ per unit in two geographic regions$-$the East and West

regions. The following information pertains to the company's first year of operations in which it produced $48,000$ units and

sold $43,000$ units.Manufacturing: Direct labor $ $12$Variable selling and administrative $ $5$

Fixed costs per year:Fixed selling and administrative expense $ $456,000$The company sold $33,000$ units in the East region and $10,000$ units in the West region. It determined that $$220,000$ of its

fixed selling and administrative expense is traceable to the West region, $$170,000$ is traceable to the East region, and the

remaining $$66,000$ 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.

Assume the West region invests $$38,000$ 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? Required information

$[$The following information applies to the questions displayed below.$]$

Diego Company manufactures one product that is sold for $$77$ per unit in two geographic regions$-$the East and West

regions. The following information pertains to the company's first year of operations in which it produced $48,000$ units and

sold $43,000$ units.Manufacturing: Direct labor $ $ $12$Variable selling and administrative $$5$

Fixed costs per year:Fixed selling and administrative expense $ $456,000$The company sold $33,000$ units in the East region and $10,000$ units in the West region. It determined that $$220,000$ of its

fixed selling and administrative expense is traceable to the West region, $$170,000$ is traceable to the East region, and the

remaining $$66,000$ is a common fixed expense. The company will co

$[$The following information applies to the questions displayed below.$]$

Diego Company manufactures one product that is sold for $$77$ per unit in two geographic regions$-$the East and West

regions. The following information pertains to the company's first year of operations in which it produced $48,000$ unir $ $12$Variable selling and administrative $$5$ Wingate Company, a wholesale distributor of electroni

Fixed costs per year:Fixed selling and administrative expense $ $456,000$The company sold $33,000$ units in the East region and $10,000$ units in the West region. It determined that $$220,000$ of its

fixed selling and administrative expense is traceable to the West region, $$170,000$ is traceable to the East region, and the

remaining $$66,000$ 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.

Prhe East and West

regions.