Question

Check my work Diego Company manufactures one product that is sold for $76 per unit in two geographic regions--the East and West regions. The following information pertan the company's first year of operations in which it produced 58.000 units and sold 54,000 units. 5.00 points 6. What is the company's net operating income (loss) under absorption costing? Variable costs per unit Manufacturing Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Feed costs per year Fored manufacturing overhead Foed selling and administrative expenses S100,000 S 640,000 The company sold 40,000 units in the East region and M.000 units in the West region it determined that $320,000 of its feed selling and administrative expenses is traceable to the West region, $270.000 is traceable to the East region, and the remaining 550.000 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 References Book & Resources

Answer 1

Solution:

Product cost per unit under absorption costing = 23 + 15+ 3 + (1160000/ 58000) = $61 per unit

Gross Profit = ($76 - $61) * 54000 units = $810,000

Net Operating Income = Gross profit - Variable selling and adm. expense - Fixed selling and administrative expense

= $810000 - ($3*54000) - $640000

= $8,000