ACCOUNTING
ACCOUNTING
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[The following information applies to the questions displayed below.]
Diego Company manufactures one product that is sold for $71 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 42,000 units and sold 37,000 units. |
Variable costs per unit: | ||
Manufacturing: | ||
Direct materials | $ | 21 |
Direct labor | $ | 12 |
Variable manufacturing overhead | $ | 3 |
Variable selling and administrative | $ | 5 |
Fixed costs per year: | ||
Fixed manufacturing overhead | $ | 840,000 |
Fixed selling and administrative expenses | $ | 330,000 |
|
The company sold 27,000 units in the East region and 10,000 units in the West region. It determined that $160,000 of its fixed selling and administrative expenses is traceable to the West region, $110,000 is traceable to the East region, and the remaining $60,000 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:
10.00 points
10.00 points
Required information
Required: | |
1. | What is the unit product cost under variable costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
2.
value:
10.00 points
10.00 points
Required information
2. | What is the unit product cost under absorption costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
3.
value:
10.00 points
10.00 points
Required information
3. | What is the company’s total contribution margin under variable costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
4.
value:
10.00 points
10.00 points
Required information
4. | What is the company’s net operating income (loss) under variable costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
5.
value:
10.00 points
10.00 points
Required information
5. | What is the company’s total gross margin under absorption costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
6.
value:
10.00 points
10.00 points
Required information
6. | What is the company’s net operating income (loss) under absorption costing? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
7.
value:
10.00 points
10.00 points
Required information
7. | What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? |
eBook & Resources
eBook: Explain how variable costing differs from absorption costing and compute unit product costs under each method.eBook: Prepare a segmented income statement that differentiates traceable fixed costs from common fixed costs and use it to make decisions.eBook: Prepare income statements using both variable and absorption costing.eBook: Reconcile variable costing and absorption costing net operating incomes and explain why the two amounts differ.
8.
value:
10.00 points
10.00 points
Required information
1. | What is the company’s break-even point in unit sales? |