Chapter 6 Required Information The following information applies to the question

ID: 2541062 • Letter: C

Question

Chapter 6 Required Information The following information applies to the questions displayed below Diego Company manufactures one product that is sold for $73 per unit in two geographic regions-the East and West regions. The folowing Information pertains to the company's first year of operations in which it produced 44,000 units and sold 39,000 unts. 16 Variable manufacturing overhbead Tixed manufacturing overhead 748,000 rixed selling and adnimistrative expens400,0 The company sold 29,000 units in the East region and 10,000 units in the West region it determined that $180,000 of is fxed selling and administrative expense is traceable to the West region, $130,000 is traceable to the East region, and the remaining $90,000 is a common fixed expense. The company will continue to incur the total amount of its fixe manufacturing overhead costs as long as it continues to produce any amount of its only product 3. What is the company's total contribution margin under variable costing? Pree 345.-9of9 lll Next > MacBook Air 888 a 5

Explanation / Answer

Answer

Variable cost per unit:

Direct material

$ 23.00

Direct labor

$ 16.00

Manufacturing overhead

$ 2.00

Selling & administrative overhead

$ 4.00

Total variable cost per unit

$ 45.00

Working

East region

West Region

Company's total

Units sold

29000

10000

39000

Sale price per unit

$ 73.00

C=A x B

Sales Revenue

$ 2117000.00

$ 730000.00

$ 2847000.00

D [calculated above]

Variable cost per unit

$ 45.00

E=A x D

Total variable cost

$ 1305000.00

$ 450000.00

$ 1755000.00

F = C - E

Contribution margin

$ 812000.00

$ 280000.00

$ 1,092,000.00