Required information The Foundational 15 (Static) [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 $80 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 40,000 units and sold 35,000 units. Variable costs per uniti Manufacturing: Direct materials. Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 24 $ 14 $ 2 $ 4 $ 800,000 $ 496,000 The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 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. 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 $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? Profit will by 15. Assume the West region invests $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? Profit will 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? O Higher O Lower 7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? (Enter any losses or deductions as a negative value.) Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Add: Fixed manufacturing overhead cost released from inventory under absorption costing Deduct: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing 6. What is the company's net operating income (loss) under absorption costing? Net operating income Net operating loss