[The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $76 per unit in two geographic regions- East and West. The following information pertains to the company's first year of operations in which it produced 58,000 units and sold 54,000 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 $ 23 $ 15 $ 3 $3 $ 1,160,000 $ 640,000 The company sold 40,000 units in the East region and 14,000 units in the West region. It determined $320,000 of its fixed selling and administrative expense is traceable to the West region, $270,000 is traceable to the East region, and the remaining $50,000 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. 7. What is the difference between the variable costing and absorption costing net operating incomes (losses)? Note: Enter any losses or deductions as a negative value. Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Absorption costing net operating income (loss)
[The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $76 per unit in two geographic regions- East and West. The following information pertains to the company's first year of operations in which it produced 58,000 units and sold 54,000 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 $ 23 $ 15 $ 3 $3 $ 1,160,000 $ 640,000 The company sold 40,000 units in the East region and 14,000 units in the West region. It determined $320,000 of its fixed selling and administrative expense is traceable to the West region, $270,000 is traceable to the East region, and the remaining $50,000 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. 7. What is the difference between the variable costing and absorption costing net operating incomes (losses)? Note: Enter any losses or deductions as a negative value. Difference of Variable Costing and Absorption Costing Net Operating Income (Losses) Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing 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 $76 per unit in two geographic regions-
East and West. The following information pertains to the company's first year of operations in which it
produced 58,000 units and sold 54,000 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
$ 23
$ 15
$ 3
$3
$ 1,160,000
$ 640,000
The company sold 40,000 units in the East region and 14,000 units in the West region. It determined
$320,000 of its fixed selling and administrative expense is traceable to the West region, $270,000 is
traceable to the East region, and the remaining $50,000 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.
7. What is the difference between the variable costing and absorption costing net operating incomes (losses)?
Note: Enter any losses or deductions as a negative value.
Difference of Variable Costing and Absorption Costing Net Operating Income (Losses)
Variable costing net operating income (loss)
Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing
Absorption costing net operating income (loss)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F345385b6-a56a-4a4d-81cf-9b11ab9eb581%2F4f482d6e-06f0-4f43-a0ea-2de4e13000f9%2Fgzpo7_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
Diego Company manufactures one product that is sold for $76 per unit in two geographic regions-
East and West. The following information pertains to the company's first year of operations in which it
produced 58,000 units and sold 54,000 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
$ 23
$ 15
$ 3
$3
$ 1,160,000
$ 640,000
The company sold 40,000 units in the East region and 14,000 units in the West region. It determined
$320,000 of its fixed selling and administrative expense is traceable to the West region, $270,000 is
traceable to the East region, and the remaining $50,000 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.
7. What is the difference between the variable costing and absorption costing net operating incomes (losses)?
Note: Enter any losses or deductions as a negative value.
Difference of Variable Costing and Absorption Costing Net Operating Income (Losses)
Variable costing net operating income (loss)
Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing
Absorption costing net operating income (loss)
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VIEWStep 2: Calculation of Net Operating income (loss) under Absorption Costing
VIEWStep 3: Calculation of Net Operating income (loss) under Variable Costing
VIEWStep 4: Fixed Manufacturing overhead Cost deferred in inventory under absorption
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