Diego Company manufactures one product that is sold for $75 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 46,000 units and sold 42,000 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 $ 25 $ 20 $2 $4 al gross margin $ 644,000 $ 388,000 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 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 company's total gross margin under absorption costing?
Diego Company manufactures one product that is sold for $75 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 46,000 units and sold 42,000 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 $ 25 $ 20 $2 $4 al gross margin $ 644,000 $ 388,000 The company sold 31,000 units in the East region and 11,000 units in the West region. It determined that $200,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $38,000 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 company's total gross margin under absorption costing?
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Diego Company manufactures one product that is sold for $75 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 46,000 units and sold 42,000 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
E
al gross margin
Okay
The company sold 31,000 units in the East region and 11,000 units in
the West region. It determined that $200,000 of its fixed selling and
administrative expense is traceable to the West region, $150,000 is
traceable to the East region, and the remaining $38,000 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 company's total gross margin under absorption costing?
R
T
61
Y
/
CV
$25
$20
$ 644,000
$ 388,000
$2
$4
You
U 1
O
Expert Solution
Step 1
Total Manufacturing Cost :— It is the total cost incurred for the manufacturing of product during the period.
Total Manufacturing cost
= Direct material cost + Direct Labour Cost + Manufacturing Overhead
Cost of Goods Sold :— It is the total cost of units sold during the period.
Cost of Goods Sold
= Beginning finished goods inventory + Cost of Goods Manufactured — Ending finished goods inventory
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