The following information applies to the questions displayed below Diego Company manufactures one product that is sold for $72 per unit in two geographic regionsthe East and West regions The following information pertains to the companys first year of operations in which it produced 43,000 units and sold 38,000 units Variable costs per unit Manufacturing Direct materials $ 22 Direct labor $ 14 Variable manufacturing overhead $ 3 Variable selling and administrative $ 5 Fixed costs per year Fixed manufacturing overhead $ 774,000 Fixed selling and administrative expenses $ 346,000 The company sold 28,000 units in the East region and 10,000 units in the West region It determined that $170,000 of its fixed selling and administrative expenses is traceable to the West region, $120,000 is traceable to the East region, and the remaining $56,000 is a common fixed cost 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 rev 10 20 2016 QC CS 66725 1 value 1 00 points Required information Required 1 What is the unit product cost under variable costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 2 value 1 00 points Required information 2 What is the unit product cost under absorption costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 3 value 1 00 points Required information 3 What is the companys total contribution margin under variable costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 4 value 1 00 points Required information 4 What is the companys net operating income (loss) under variable costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 5 value 1 00 points Required information 5 What is the companys total gross margin under absorption costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 6 value 1 00 points Required information 6 What is the companys net operating income (loss) under absorption costing References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 7 value 1 00 points Required information 7 What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses) Garrison 15e Recheck 2014 12 17 References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 8 value 1 00 points Required information 1 What is the companys break even point in unit sales 2 Is it above or below the actual sales volume Below Above Garrison 15e Recheck 2014 12 17 References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 9 value 1 00 points Required information 9 If the sales volumes in the East and West regions had been reversed, what would be the companys overall break even point in unit sales References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 10 value 1 00 points Required information 10 What would have been the companys variable costing net operating income (loss) if it had produced and sold 38,000 units References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 11 value 1 00 points Required information 11 What would have been the companys absorption costing net operating income (loss) if it had produced and sold 38,000 units rev 01 19 2015 QC CS 2031, 01 21 2015 QC CS 2031, 01 23 2015 QC CS 2031 References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 12 value 1 00 points Required information 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 Higher Lower References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 13 value 1 00 points Required information 13 Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 14 value 1 00 points Required information 14 Diego is considering eliminating the West region because an internally generated report suggests the regions total gross margin in the first year of operations was $20,000 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 References eBook Resources Worksheet Learning Objective 06 01 Explain how variable costing differs from absorption costing and compute unit product costs under each method Learning Objective 06 03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ Difficulty 2 Medium Learning Objective 06 02 Prepare income statements using both variable and absorption costing Learning Objective 06 04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions Check my work 15 value 1 00 points Required information 15 Assume the West region invests $33,000 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 rev 10 20 2016 QC CS 66725 References eBook Resources

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 05, 2024

[The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $72 per unit in two geographic regionsthe

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

Diego Company manufactures one product that is sold for $72 per unit in two geographic regionsthe East and West regions. The following information pertains to the companys first year of operations in which it produced 43,000 units and sold 38,000 units.


Variable costs per unit:
Manufacturing:
Direct materials	$	22
Direct labor	$	14
Variable manufacturing overhead	$	3
Variable selling and administrative	$	5
Fixed costs per year:
Fixed manufacturing overhead	$	774,000
Fixed selling and administrative expenses	$	346,000

The company sold 28,000 units in the East region and 10,000 units in the West region. It determined that $170,000 of its fixed selling and administrative expenses is traceable to the West region, $120,000 is traceable to the East region, and the remaining $56,000 is a common fixed cost. 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.

rev: 10_20_2016_QC_CS-66725

value: 1.00 points

Required information

Required:
1.	What is the unit product cost under variable costing?

References

eBook & Resources

WorksheetLearning Objective: 06-01 Explain how variable costing differs from absorption costing and compute unit product costs under each method.Learning Objective: 06-03 Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.

Difficulty: 2 MediumLearning Objective: 06-02 Prepare income statements using both variable and absorption costing.Learning Objective: 06-04 Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.

Check my work

value: 1.00 points

Required information

2.	What is the unit product cost under absorption costing?

References

eBook & Resources

Check my work

value: 1.00 points

Required information

3.	What is the companys total contribution margin under variable costing?

References

eBook & Resources

Check my work

value: 1.00 points

Required information

4.	What is the companys net operating income (loss) under variable costing?

References

eBook & Resources

Check my work

value: 1.00 points

Required information

5.	What is the companys total gross margin under absorption costing?

References

eBook & Resources

Check my work

value: 1.00 points

Required information

6.	What is the companys net operating income (loss) under absorption costing?

References

eBook & Resources

Check my work

value: 1.00 points

Required information

7.	What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)?

Garrison 15e Recheck 2014-12-17

References

eBook & Resources

Check my work

value: 1.00 points

Required information

What is the companys break-even point in unit sales?

Is it above or below the actual sales volume?

	Below
	Above

Garrison 15e Recheck 2014-12-17

References

eBook & Resources

Check my work

value: 1.00 points

Required information

9.	If the sales volumes in the East and West regions had been reversed, what would be the companys overall break-even point in unit sales?

References

eBook & Resources

Check my work

10.

value: 1.00 points

Required information

10.	What would have been the companys variable costing net operating income (loss) if it had produced and sold 38,000 units?

References

eBook & Resources

Check my work

11.

value: 1.00 points

Required information

11.	What would have been the companys absorption costing net operating income (loss) if it had produced and sold 38,000 units?

rev: 01_19_2015_QC_CS-2031, 01_21_2015_QC_CS-2031, 01_23_2015_QC_CS-2031

References

eBook & Resources

Check my work

12.

value: 1.00 points

Required information

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?

	Higher
	Lower

References

eBook & Resources

Check my work

13.

value: 1.00 points

Required information

13.	Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions.

References

eBook & Resources

Check my work

14.

value: 1.00 points

Required information

14.

Diego is considering eliminating the West region because an internally generated report suggests the regions total gross margin in the first year of operations was $20,000 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?

References

eBook & Resources

Check my work

15.

value: 1.00 points

Required information

15.	Assume the West region invests $33,000 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?

rev: 10_20_2016_QC_CS-66725

References

eBook & Resources