[The following information applies to the questionsdisplayed below.]
Diego Company manufactures one product that is sold for $75 perunit in two geographic regionsâthe East and West regions. Thefollowing information pertains to the companyâs first year ofoperations in which it produced 57,000 units and sold 52,000units.
Variablecosts per unit: Manufacturing: Directmaterials $ 25 Direct labor $ 18 Variablemanufacturing overhead $ 3 Variable sellingand administrative $ 5 Fixed costs peryear: Fixed manufacturing overhead $ 627,000 Fixed selling and administrativeexpenses $ 645,000
The company sold 36,000 units in the East region and 16,000units in the West region. It determined that $310,000 of its fixedselling and administrative expenses is traceable to the Westregion, $260,000 is traceable to the East region, and the remaining$75,000 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.
8 a. What is the company's break-even point in unit sales?
8 b. Is it above or below the actual slaes volume?
9. If the sales volumes in the East and West regions had beenreversed. What would be the company's overall break-even point inthe unit sales?
10. What would have been the company's variable costing netoperating income (loss) if it had produced and sold 52,000units?
11. What would have been the company's absorption costing netoperating income (loss) if it had produced and sold 52,000units?
[The following information applies to the questionsdisplayed below.]
Diego Company manufactures one product that is sold for $75 perunit in two geographic regionsâthe East and West regions. Thefollowing information pertains to the companyâs first year ofoperations in which it produced 57,000 units and sold 52,000units. |
Variablecosts per unit: | ||
Manufacturing: | ||
Directmaterials | $ | 25 |
Direct labor | $ | 18 |
Variablemanufacturing overhead | $ | 3 |
Variable sellingand administrative | $ | 5 |
Fixed costs peryear: | ||
Fixed manufacturing overhead | $ | 627,000 |
Fixed selling and administrativeexpenses | $ | 645,000 |
The company sold 36,000 units in the East region and 16,000units in the West region. It determined that $310,000 of its fixedselling and administrative expenses is traceable to the Westregion, $260,000 is traceable to the East region, and the remaining$75,000 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. 8 a. What is the company's break-even point in unit sales? 8 b. Is it above or below the actual slaes volume? 9. If the sales volumes in the East and West regions had beenreversed. What would be the company's overall break-even point inthe unit sales? 10. What would have been the company's variable costing netoperating income (loss) if it had produced and sold 52,000units? 11. What would have been the company's absorption costing netoperating income (loss) if it had produced and sold 52,000units? |