e following information applies to the questions displayed below.]
Diego Company manufactures one product that is sold for $72 per unit in two geographic regionsâthe East and West regions. The following information pertains to the companyâs 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.
Difference of Variable Costing and Absorption Costing Net Operating Incomes Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing net operating income (loss) $34,000
e following information applies to the questions displayed below.]
| Diego Company manufactures one product that is sold for $72 per unit in two geographic regionsâthe East and West regions. The following information pertains to the companyâs 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. |
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Related questions
Diego Company manufactures one product that is sold for $70 per unit in two geographic regionsâthe East and West regions. The following information pertains to the companyâs 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.
| 13. | Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. INCOME STATEMENT
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14. Diego is considering eliminating the West region because an internally generated report suggests the regionâs total gross margin in the first year of operations was $10,000 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 6% 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 $31,000 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 _____ by _____
If the sales volumes in the East and West regions had beenreversed, what would be the companyâs overall break-even point inunit sales?
The following information applies to the questions displayedbelow.]
Diego Company manufactures one product that is sold for $70 perunit in two geographic regionsâthe East and West regions. Thefollowing information pertains to the companyâs first year ofoperations in which it produced 53,000 units and sold 48,000units. |
| Variable costs per unit: | ||
| Manufacturing: | ||
| Directmaterials | $ | 21 |
| Direct labor | $ | 10 |
| Variablemanufacturing overhead | $ | 2 |
| Variable sellingand administrative | $ | 4 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 1,060,000 |
| Fixed selling and administrativeexpenses | $ | 557,000 |
| The company sold 36,000 units in the East region and 12,000units in the West region. It determined that $270,000 of its fixedselling and administrative expenses is traceable to the Westregion, $220,000 is traceable to the East region, and the remaining$67,000 is a common fixed cost. The company will continue to incurthe total amount of its fixed manufacturing overhead costs as longas it continues to produce any amount of its only product. question related to this summary is above |
Diego Company manufactures one product that is sold for $77 perunit in two geographic regionsâthe East and West regions. Thefollowing information pertains to the companyâs first year ofoperations in which it produced 48,000 units and sold 43,000units.
| Variable costs per unit: | ||
| Manufacturing: | ||
| Directmaterials | $ | 27 |
| Direct labor | $ | 12 |
| Variablemanufacturing overhead | $ | 3 |
| Variable sellingand administrative | $ | 5 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 864,000 |
| Fixed selling and administrativeexpenses | $ | 456,000 |
The company sold 33,000 units in the East region and 10,000units in the West region. It determined that $220,000 of its fixedselling and administrative expenses is traceable to the Westregion, $170,000 is traceable to the East region, and the remaining$66,000 is a common fixed cost. The company will continue to incurthe total amount of its fixed manufacturing overhead costs as longas it continues to produce any amount of its only product. |
| Required: |
Diego is considering eliminating the West region because aninternally generated report suggests the regionâs total grossmargin in the first year of operations was $50,000 less than itstraceable fixed selling and administrative expenses. Diego believesthat if it drops the West region, the East regionâs sales will growby 5% in Year 2. Using the contribution approach for analyzingsegment profitability and assuming all else remains constant inYear 2, what would be the profit impact of dropping the West regionin Year 2? |
| Profit impact ifthe western region is dropped. (Input the amount aspositive value.) |
| Profit will | (Click toselect)DecreaseIncrease | by | $ |
