Chapter 6 The Foundational 15 Company manufactures one product that Diego is sol

Question

Chapter 6 The Foundational 15 Company manufactures one product that Diego is sold for S80 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 OH S 24 14 Variable selling& administrative Fixed costs per year Fixed manufacturing OH Fixed selling& administrative expenses S 800,000 496,000 The company sold 25,000 units in the East Region and 10,000 in the West Region. It determined that $250,000 of its fixed selling and administrat Region, S150,000 is traceable to the East Region, and the remaining $96,000 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 any amount of its only product. tive expenses is traceable to the West produce Required Answer each question independently based on the original data unless instructed otherwise. You do not need to prepare a s statement until question 13 egmented income

Explanation / Answer

Production = 40000 sale Price = 80 East West Common Sold = 35000 25000 10000 Direct Materials 24 250000 150000 96000 Direct Labor 14 Variable Manufacturing OH 2 Variable Selling and administrative 4 Total VC/Unit 44 Contribution/Unit 36 Fixed Cost per year: Fixed Manufacturing OH 800000 Fixed Selling and administrative 496000 Total FC 1296000 8 BEP = FC/Contribution per unit BEP = 1296000/36 36000 Units (Above Sales) 9 No change on overall BEP 10 sales(35000*80) 2800000 Less: Variable Cost(35000*44) 1540000 Contribution 1260000 Less: Periodic Cost Fixed Manufacturing OH 800000 Fixed Selling and administrative 496000 Net Loss -36000

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