Question

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 53,000 units and sold 48,000 units. Variable costs per uniti Manufacturings Direct naterials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed selling and administrative expense 21 10 2 4 $1,060,000 557,000 The company sold 36,000 units in the East region and 12,000 units in the West region. It determined that $270,000 of its fixed selling and administrative expense is traceable to the West region, $220,000 is traceable to the East region, and the remaining $67,000 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.

Answer 1

Unit product cost under variable costing = Direct material + Direct labor + Variable overhead cost

= 21+10+2

= $33 per unit

2.Unit product cost under absorption costing = Direct material + Direct labor + Variable overhead cost+ Fixed manufacturing overhead cost per unit

= 33 + 1,060,000/53,000

= $53 per unit

3.Total contribution Margin = Total Sales – Total Variable costs

= (70-21-10-2-4)*48000

= $1,584,000