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Diego Company manufactures one product that is sold for $70 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 41,000 units and sold 36,000 units.

Variable costs per unit:
Manufacturing:
Direct materials	$	20
Direct labor	$	10
Variable manufacturing overhead	$	2
Variable selling and administrative	$	4
Fixed costs per year:
Fixed manufacturing overhead	$	984,000
Fixed selling and administrative expenses	$	308,000

The company sold 26,000 units in the East region and 10,000 units in the West region. It determined that $150,000 of its fixed selling and administrative expenses is traceable to the West region, $100,000 is traceable to the East region, and the remaining $58,000 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.

1.

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.

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2.

value: 1.00 points

Required information

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

References

3.

value: 1.00 points

Required information

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

4.

value: 1.00 points

Required information

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