Saved Chapter 7 Foundational 15 www. wwwww 14 Dlego Company manufactures one product that is sold for $72 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 55,000 units and sold 50,000 units Part 14 of 15 1 0.83 points Variable costs per unit: Manufacturing: Direct naterials $ 23 Direct labor 5 14 variable manufacturing over head $ 3 Variable selling and administrative $ 5 Fixed costs per year: Fixed manufacturing over head $ 770,000 Fixed selling and administrative expense $ 607,000 The company sold 37,000 units in the East region and 13,000 units in the West region. It determined that $290,000 of its fixed selling and administrative expense is traceable to the West region, $240,000 is traceable to the East region, and the remaining $77,000 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. Part Men Foundational 7-14 (Algo) 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 $56,000 less than its traceable fbxed 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 Saved Chapter 7 Foundational 15 15 The Foundational 15 (Algo) (L07-1, LO7-2, L07-3, LO7-4, LO7-5) The following information applies to the questions displayed below) Diego Company manufactures one product that is sold for $72 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 55,000 units and sold 50,000 units Part 15 of 15 0.38 points Variable costs per unit: Manufacturing: Direct materiais $ 23 Direct labor $ 14 variable manufacturing over head $3 variable selling and ministrative 55 Fixed costs per year Fixed manufacturing overhead 5.770.000 Fixed selling and administrative expense $ 60,000 The company sold 37,000 units in the East region and 13,000 units in the West region. It determined that $290,000 of its fixed selling and administrative expense is traceable to the West region, $240,000 is traceable to the East region, and the remaining $77000 is a common fixed expense. The company will continue to incur the total amount of its feed manufacturing overhead costs as long as it continues to produce any amount of its only product Foundational 7-15 (Algo) 15. Assume the West region invests $45,000 in a new advertising campaign in Year 2 that increases its unit sales by 20% of all else remains constant what would be the profit impact of pursuing the advertising campaign? Proot w
