Required information The Foundational 15 (L07-1, L07-2, L07-3, L07-4, L07-5) 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 59,000 units and sold 54,000 units. Variable costa per unit Manufacturing: Direct materials 27 Direct labor $ 10 Variable manufacturing overhead $ Variable selling and administrative $ Fixed costs per year: Fixed manufacturing overhead $1,298,000 Fixed selling and administrative expense $ 662,000 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52,000 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. Foundational 7-14 14. 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 $122,000 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? Profit wil by Required information The Foundational 15 (L07-1, L07-2, L07-3, L07-4, L07-5) 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 59,000 units and sold 54,000 units Variable costs per unit: Manufacturing: Direct materiale 27 Direct labor 5 10 Variable manufacturing overhead 5 Variable selling and administrative $ Pixed costa per year: Fixed manufacturing overhead $1,298,000 Fixed selling and administrative expense 5 662,000 The company sold 41,000 units in the East region and 13,000 units in the West region. It determined that $330,000 of its fixed selling and administrative expense is traceable to the West region, $280,000 is traceable to the East region, and the remaining $52.000 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. Foundational 7-15 15. Assume the West region invests $49,000 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? Profit will Exercise 7-1 Variable and Absorption Costing Unit Product Costs (L07-1) Ida Sidha Karya Company is a family-owned company located on the island of Bali in Indonesia. The company produces a handcrafted Balinese musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $800. Selected data for the company's operations last year follow. 0 21,000 18,000 3,000 Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs Trixed manufacturing overhead Fixed selling and administrative $ $ $ $ 210 370 53 17 $980,000 $930,000 Required: 1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan, (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 2. Assume that the company uses variable costing. Compute the unit product cost for one gamelan. 1. Absorption costing unit product cost 2. Variable costing unit product cost
