Question

Diego Company manufactures one product that is sold for $81 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 52,000 units and sold 47,000 units. 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 20 20 4 tA AAtA $936,000 $552,000 The company sold 35,000 units in the East region and 12,000 units in the West region. It determined that $260,000 of its fixed selling and administrative expense is traceable to the West region, $210,000 is traceable to the East region, and the remaining $82,000 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. 13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. Income Statement Total Company East West

Answer 1

Contribution Margin segmented income statement
	Total Company	East	West
Sales Revenue	3,807,000	2,835,000	972,000
Less: Variable costs	2,350,000	1,750,000	600,000
Contribution Margin	1,457,000	1,085,000	372,000
Less: Traceable Fixed Expenses	470,000	210,000	260,000
Segment Margin	987,000	875,000	112,000
Common Fixed costs	1,018,000
Net operating Income	(31,000)

C D 1 Contribution Margin segmented income statement 3 Sales Revenue 4 Less: Variable costs 5 Contribution Margin 6 Less: Traceable Fixed Expenses 7 Segment Margin 8 Common Fixed costs 9 Net operating Income Total Company =C3+D3 =C4+D4 =B3-B4 =C6+D6 =B5-B6 =936000+552000-B6 =B7-B8 East West =35000*81 =12000*81 =35000*50 =12000*50 =C3-C4 =D3-D4 210000 260000 =C5-C6 =D5-D6