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Required information The Foundational 15 (LO6-1, LO6-2, LO6-3, LO6-4, LO6-5] [The following information applies to the questions displayed below.) Diego Company manufactures one product that
Required information The Foundational 15 (LO6-1, LO6-2, LO6-3, LO6-4, LO6-5] [The following information applies to the questions displayed below.) Diego Company manufactures one product that is sold for $71 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 54,000 units and sold 49,000 units. 12 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 expense $ 864,000 $ 586,000 The company sold 36,000 units in the East region and 13,000 units in the West region. It determined that $280,000 of its fixed selling and administrative expense is traceable to the West region, $230,000 is traceable to the East region, and the remaining $76,000 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. 13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. Answer is complete and correct. East Income Statement Total Company Sales 3.479.000 Variable expenses 2,058,000 Contribution margin 1,421,000 Traceable fixed expenses 510,000 Region segment margin 911,000 Common fixed expenses not traceable to al 940,000 regions Net operating loss $ (29,000) $ 2,556,000 1,512,000 1,044,000 230,000 $ 814,000 West $ 923,000 546,000 377,000 280,000 $ 97,000 15. Assume the West region invests $44,000 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 by
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