Question

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Diego Company manufactures one product that is Sola Tor $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 40,000 units and sold 35,000 units. - 24 14 2 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 AN $800,000 $ 496,000 The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 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. What is the amount of the difference between the variable costing and absorption ting net operating incomes (losses)? (Enter any losses or deductions as a negative ue.) Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) iable costing net operating income (loss) $ 800,000 PI sorption costing net operating income (loss) This is a numeric cell, so please enter numbers only.

Answer 1

vaariable costing 25.00 direct material per unit direct labor variable mfg unit product cost 14.00 2.00 41.00 DIEGO company income statement variable costing for the year ended vaariable costing sales 2800000 less : variable cost of goods sold 1435000 less : variable selling 140000 contribution margin 1225000 12,96,000 less: fixed costs (fixed selling+mfg overhead) net operating profit -71,000

absorption costing 25.00 direct material per unit direct labor 14.00 variable manufacturing cost per unit 2.00 fixed manufacturing cost per unit unit product cost 20.00 61.00 DIEGO company absorption costing income statement for the year ended absorption costing 28,00,000 sales 2135000 less: cost of goods sold gross margin less : selling and administration costs 6,65,000 636000 net operating income (loss) 29,000

differene of variable costing and absorption costing incomes(losses) -71,000 net operating income variable costing add fixed manufacturing overhead cost differed in ending inventory =(40000-35000)*20 net operating income absorption costing 100000 29,000

since the difference between the variable costing and absorption costing income is fixed manufacturing overhead cost differed in inventory