Question

13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. DIEGO COMPANY Required Information Segmented Income Statement Total Company Diego Company manufactures one product that is sold for 576 per unit in two geographic regions--the East and West regions. The following information perta the company's first year of operations in which it produced 58,000 units and solu 54,000 units Variable costs per unit Manufacturing Direct materials Direct labor Variable manufacturing overhead Variable ring and administrative Fored costs per year. Foxed manufacturing overhead Fixed selling and administrative expenses References eBook & Resources $ 160,000 $ 640,000 Worksheet coming net opera Learning Objective: 05-01 Explain how vanable costing differs from absorption costing and compute unit product oss under each method LETO The company sold 40.000 units in the East region and 14,000 units in the West reg It determined that $320,000 of its fixed selling and administrative expenses is traceable to the West region. $270,000 is traceable to the East region, and the remaining $50.000 is a common fixed cost. The company will continue to incur the total amount of its fred manufacturing overhead costs as long as it continues to Difficulty: 2 Medium Leaming Objective: 05-02 Prepare Income statements using both vanabe and absorption costing makedoc

Answer 1

DIEGO COMPANY
Segmented Income Statement
	Total Company	East	West
Sales	$4104000	(40000*$76)= $3040000	(14000*$76)= $1064000
Less: Variable costs	2376000	(40000*$44)= 1760000	(14000*$44)= 616000
Contribution margin	1728000	1280000	448000
Less: Traceable fixed costs	590000	270000	320000
Region segment margin	1138000	1010000	128000
Less: Common fixed expenses	1210000
Net operating income (loss)	$(72000)

Variable costs per unit= $23+15+3+3= $44 per unit

Fixed selling and administrative expenses that is not traceable= $640000-320000-270000= $50000

Common fixed expense= Fixed manufacturing overhead+Fixed selling and administrative expenses that is not traceable

= $1160000+50000= $1210000