Question

Required information The Foundational 15 (L07-1, LO7-2, L07-3, L07-4, LO7-5) The following information applies to the questions displayed below.) 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. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Pixed costs per years Fixed manufacturing overhead Pixed selling and administrative expense S 800.000 $496,000 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 Foundational 7-13 13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. Income Statement Total Company A Woat

Answer 1

Selling prcie	80
Less: Variable expenses
Direct materials	24
Direct labor	14
Variable manufacturing overhead	2
Variable selling and administrative expense	4
Total Variable expenses	44
Unit Contribution margin	36
13
	Total Company	East	West
Sales	2800000	2000000	800000
Variable expenses	1540000	1100000	440000
Contribution margin	1260000	900000	360000
Traceable fixed expenses	400000	150000	250000
Region segment margin	860000	750000	110000
Common fixed expenses not traceable to regions	896000
Net Operating loss	(36000)
14
Loss in Contribution margin of West	-360000	=10000*36
Increase in Contribution margin of East	45000	=25000*36*5%
Avoidable fixed expenses	250000
Net change in income	-65000
Profits will decrease by 65000
15
Increase in Contribution margin of West	72000	=10000*20%*36
Less: Advertising costs	-30000
Net change in income	42000
Profits will increase by 42000