The Foundational 15 (Algo) [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 $81 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 52,000 units and sold 47,000 units. The company sold 35,000 units in the East region and 12,000 units in the West region. It determined that $260,000 of its fixed selling and administrative expense is traceable to the West region, $210,000 is traceable to the East region, and the remaining $82,000 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. Foundational 6-14 (Algo) 14. Diego is considering eliminating the West region because an internally generated report suggests the regian's total gross margin in the first year of operations was $32,000 less than its traceable fixed selling and administrative expenses. Diego belleves 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 remoins constant in Year 2, what would be the profit impact of dropping the West region in Year 2? The Foundational 15 (Algo) [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 $81 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 52,000 units and sold 47,000 units. The company sold 35,000 units in the East region and 12,000 units in the West region. It determined that $260,000 of its fixed selling and administrative expense is traceable to the West region, $210,000 is traceable to the East region, and the remaining $82,000 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. Foundational 6-14 (Algo) 14. Diego is considering eliminating the West region because an internally generated report suggests the regian's total gross margin in the first year of operations was $32,000 less than its traceable fixed selling and administrative expenses. Diego belleves 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 remoins constant in Year 2, what would be the profit impact of dropping the West region in Year 2
