Required information [The following information applies to the questions displayed below.] 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 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. $ 644,000 $ 388,000 7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? Variable costing net operating income (loss) .... ************** Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Absorption costing net operating income (loss)
Required information [The following information applies to the questions displayed below.] 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 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. $ 644,000 $ 388,000 7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)? Variable costing net operating income (loss) .... ************** Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Absorption costing net operating income (loss)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
[The following information applies to the questions displayed below.]
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
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.
Absorption costing net operating income (loss)
$25
$ 20
$2
$4
$ 644,000
$ 388,000
7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)?
Difference of Variable Costing and Absorption Costing Net Operating Income (Losses)
Variable costing net operating income (loss)
********
************
*************
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Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
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
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.
Absorption costing net operating income (loss)
$25
$ 20
$2
$4
$ 644,000
$ 388,000
7. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)?
Difference of Variable Costing and Absorption Costing Net Operating Income (Losses)
Variable costing net operating income (loss)
********
************
*************
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Transcribed Image Text:The company sold 31,000 units in the East region and 11,000 units in the West region. It determ
fixed selling and administrative expense is traceable to the West region, $150,000 is traceable
remaining $38,000 is a common fixed expense. The company will continue to incur the total am
manufacturing overhead costs as long as it continues to produce any amount of its only produc
7. What is the amount of the difference between the variable costing and absorption costing net opera
Difference of Variable Costing and Absorption Costing Net Operating Income (Losses)
Variable costing net operating income (loss)
tin natin at nation in
---
Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing
Add: Fixed manufacturing overhead cost released from inventory under absorption costing
Deduct: Fixed manufacturing overhead cost deferred in inventory under absorption costing
Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing
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