What is the company’s total contribution margin under variable costing?
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The Foundational 15 (Algo) [LO6-1, LO6-2, LO6-3, LO6-4, LO6-5]
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Diego Company manufactures one product that is sold for $78 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 60,000 units and sold 57,000 units.
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 28 |
| Direct labor | $ | 12 |
| Variable manufacturing overhead | $ | 2 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 1,260,000 |
| Fixed selling and administrative expense | $ | 654,000 |
The company sold 42,000 units in the East region and 15,000 units in the West region. It determined that $340,000 of its fixed selling and administrative expense is traceable to the West region, $290,000 is traceable to the East region, and the remaining $24,000 is a common fixed expense. The company will continue to incur the total amount of its fixed
Foundational 6-3 (Algo)
3. What is the company’s total contribution margin under variable costing?
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