10 Required information The following information applies to the questions dispi

Question

10 Required information The following information applies to the questions dispiayed below Diego Company manufactures one product that is sold for $70 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 41,000 units and sold 36,000 units var abl coats per unit Variable selling and adninistrative Pixed anufacturing overhead 984,000 rative The company sold 20,000 units in the East region and 10,000 units in the West region, It determined that $150,000 of its and administretive expense is traceable to the West region, $100,000 is treceable to the East region, and the is a common fxed expense. 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 10. What would have been the company's variable costing net operating income (oss) if it had produced and sold 36,000 units?

Explanation / Answer

Per unit Total Sales (36,000 units) 70 25,20,000 Less: Variable Cost: - Direct Material 20 7,20,000 - Direct Labour 10 3,60,000 - Variable Mfg. Overhead 2 72,000 - Variable Selling & admin overhead 4 1,44,000 Contribution Margin 34 12,24,000 Less: Fixed Cost - Fixed Manufacturing Overhead 9,84,000 Fixed Selling & admin Overhead 3,08,000 Net Operating Income / (loss) (68,000)

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