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Required information The Foundational 15 [LO6-1, LO6-2, LO6-3, LO6-4, LO6-5] [The following information applies to the...

Required information

The Foundational 15 [LO6-1, LO6-2, LO6-3, LO6-4, LO6-5]

[The following information applies to the questions displayed below.]

Diego Company manufactures one product that is sold for $80 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 40,000 units and sold 35,000 units.

Variable costs per unit:
Manufacturing:
Direct materials $ 24
Direct labor $ 14
Variable manufacturing overhead $ 2
Variable selling and administrative $ 4
Fixed costs per year:
Fixed manufacturing overhead $ 800,000
Fixed selling and administrative expense $ 496,000

The company sold 25,000 units in the East region and 10,000 units in the West region. It determined that $250,000 of its fixed selling and administrative expense is traceable to the West region, $150,000 is traceable to the East region, and the remaining $96,000 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.

Foundational 6-13

13. Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions.

It requires an income statement for Total Company, East, and West starting from:

Sales

Variable expenses

Contribution margin

Traceable fixed expenses

Region segment margin

Common fixed expenses not traceable to regions

Net operating loss

Homework Answers

Answer #1

Answer-

13)

Computation of east and west regions margin:

Particulars

Total company

East

West

Sales

$2,800,000

$2,000,000

$800,000

Less:

Variable cost of goods sold

$1,540,000

$1,100,000

$440,000

Contribution margin

$1,260,000

$900,000

$360,000

Traceable fixed expenses

$400,000

$900,000

$360,000

Region segment margin

$860,000

$750,000

$110,000

Less:

Common fixed expense not traceable

$896,000

Net operating loss

($36,000)

Hence, the calculated net operating loss is .

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