Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $72 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 43,000 units and sold 38,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 22 $ 14 $ 3 $ 5 $ 774,000 $ 346,000 The company sold 28,000 units in the East region and 10,000 units in the West region. It determined that $170,000 of its fixed selling and administrative expense is traceable to the West region, $120,000 is traceable to the East region, and the remaining $56,000 is a common fixed 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. 7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? Answer is complete but not entirely correct. Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Variable costing net operating income (loss) $ Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing (56,000) (290,000) > Absorption costing net operating income (loss) $ (234,000)
Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $72 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 43,000 units and sold 38,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 22 $ 14 $ 3 $ 5 $ 774,000 $ 346,000 The company sold 28,000 units in the East region and 10,000 units in the West region. It determined that $170,000 of its fixed selling and administrative expense is traceable to the West region, $120,000 is traceable to the East region, and the remaining $56,000 is a common fixed 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. 7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? Answer is complete but not entirely correct. Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Variable costing net operating income (loss) $ Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing (56,000) (290,000) > Absorption costing net operating income (loss) $ (234,000)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 29P: Jellison Company had the following operating data for its first two years of operations: Jellison...
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