Question

Required information The Foundational 15 (LO6-1, L06-2, L06-3, L06-4, L06-5) The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $71 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 42,000 units and sold 37,000 units. 21 12 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 $ 840,000 $ 330,000 The company sold 27,000 units in the East region and 10,000 units in the West region. It determined that $160,000 of its fixed selling and administrative expense is traceable to the West region, $110,000 is traceable to the East region, and the remaining $60,000 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. Foundational 6-13 13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions.

Answer 1

Selling price	71
Less: Variable cost per unit	41	=21+12+3+5
Unit Contribution margin	30
13
	Total company	East	West
Sales	2627000	1917000	710000
Variable expenses	1517000	1107000	410000
Contribution margin	1110000	810000	300000
Traceable fixed expenses	270000	110000	160000
Region segment margin	840000	700000	140000
Common fixed expenses not traceable to regions	900000
Net Operating loss	-60000
14
Loss in Contribution margin of West	-300000	=10000*30
Increase in Contribution margin of East	40500	=27000*5%*30
Avoidable fixed selling and administrative expense	160000
Net change in Profit	-99500
Profit will decrease by 99500
15
Increase in Contribution margin of West	60000	=10000*20%*30
Less: Advertising costs	-32000
Net change in Profit	28000
Profit will increase by 28000