[The following information applies to the questions displayed below.] Diego Comp
ID: 2549660 • Letter: #
Question
[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 51,000 units and sold 47,000 units.
The company sold 34,000 units in the East region and 13,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expenses is traceable to the West region, $200,000 is traceable to the East region, and the remaining $30,000 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 produce any amount of its only product.
. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions.
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 51,000 units and sold 47,000 units.
Explanation / Answer
Income Statement
Total Company
EAST
WEST
Sales
47000 x 80
= 3760000
34000 x 80
=2720000
13000 x 80
= 1040000
Variable Expenses
=1802000+689000
=2491000
34000 x (30+18+2+3)
= 1802000
13000 x (30+18+2+3)
=689000
Contribution Margin
= 1269000
= 918000
= 351000
Traceable Fixed expenses
= 250000+200000
= 450000
= 200000
= 250000
Region segment margin
819000
= 718000
= 101000
Common fixed expenses not traceable to regions
= 816000+30000
= 846000
Net operating Loss
= ( $ 27,000)
Income Statement
Total Company
EAST
WEST
Sales
47000 x 80
= 3760000
34000 x 80
=2720000
13000 x 80
= 1040000
Variable Expenses
=1802000+689000
=2491000
34000 x (30+18+2+3)
= 1802000
13000 x (30+18+2+3)
=689000
Contribution Margin
= 1269000
= 918000
= 351000
Traceable Fixed expenses
= 250000+200000
= 450000
= 200000
= 250000
Region segment margin
819000
= 718000
= 101000
Common fixed expenses not traceable to regions
= 816000+30000
= 846000
Net operating Loss
= ( $ 27,000)
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