Question

Required Information 5. What is the company's total gross margin under absorption costing? Diego Company manufactures one product that is sold for $76 per unit in two geographic regions--the East and West regions. The following information portante the company's first year of operations in which it produced 58,000 units and sold 54,000 units Total gross margin References eBook & Resources Variable costs per unit Manufacturing Direct materials Direct labor Variable manufacturing overhead Variable sering and administrative Fixed costs per year Fixed manufacturing overhead Fored selling and administrative expenses Worksheet Leating Objective: 05-01 Explain how variable cosing differs from absorption costing and compute unit product costs under each method $ 0.000 $ 640.000 Difficulty: 2 Medium Leaming O CD: 05-02 Prepare income stoons using both variable and soon asung The company sold 40.000 units in the East region and 14.000 units in the West region. 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 $50,000 is a common xed cost. The company will continue to incur the na minimal Check my works

Answer 1

Fixed manufacturing overhead is absorbed into products under absorption costing

Fixed manufacturing overhead per unit = 1,160,000/58000 = $20 per unit

Gross Margin = Sales - Cost of goods sold

= 54000*76 - (23+15+3+20)*54000

= $810,000