Business, 10.03.2020 08:56 AbigailHaylei

Diego Company manufactures one product that is sold for $80 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 40,000 units and sold 35,000 units.
The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 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.

Required:

a. What is the unit product cost under variable costing?
b. What is the unit product cost under absorption costing?
c. What is the company’s total contribution margin under variable costing?
d. What is the company’s net operating income under variable costing?
e. What is the company’s total gross margin under absorption costing?
f. What is the company’s net operating income under absorption costing?
g. What is the amount of the difference between the variable costing and absorption costing net operating incomes? What is the cause of this difference?
h. What is the company’s break-even point in unit sales? Is it above or below the actual sales volume?

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Diego Company manufactures one product that is sold for $80 per unit in two geographic regions—the E...

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