FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Diego Company manufactures one product that is sold for $74 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 45,000 units and sold 40,000 units.
Variable costs per unit:
Manufacturing:
Direct materials
Direct labor
Variable manufacturing overhead
Variable selling and administrative
SASSA
$
$
2635
24
18
Fixed costs per year:
Fixed manufacturing overhead
$585,000
Fixed selling and administrative expenses $423,000
The company sold 30,000 units in the East region and 10,000 units in the West region. It determined that
$190,000 of its fixed selling and administrative expenses is traceable to the West region, $140,000 is
traceable to the East region, and the remaining $93,000 is a common fixed cost. 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.
Required:
What is the company's total gross margin under absorption costing?
Total gross margin
$
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Transcribed Image Text:Diego Company manufactures one product that is sold for $74 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 45,000 units and sold 40,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative SASSA $ $ 2635 24 18 Fixed costs per year: Fixed manufacturing overhead $585,000 Fixed selling and administrative expenses $423,000 The company sold 30,000 units in the East region and 10,000 units in the West region. It determined that $190,000 of its fixed selling and administrative expenses is traceable to the West region, $140,000 is traceable to the East region, and the remaining $93,000 is a common fixed cost. 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. Required: What is the company's total gross margin under absorption costing? Total gross margin $
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