diego company 494580

Ethics Challenge The Foundational 15 Total Contribution margin Net operating income Profit = 1 2 Variable expenses 3 Sales 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 expenses 1 – 2 Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Unit product cost Variable costing Absorption costing 3-4 Variable expenses: Variable cost of goods sold Variable selling and administrative Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Net operating gain (loss) 5-6 Cost of goods sold Gross margin Selling and administrative expenses 7 Variable costing net operating income Add: fixed manufacturing overhead deferred in inventory under absorption costing Absorption costing net operating income units per unit 8 Unit CM X Q – Fixed expenses 9 10-11 Variable selling and administrative Fixed manufacturing overhead Fixed selling and administrative 12 13 Traceable fixed expenses Region segment margin Common fixed expenses not traceable to regions East West 14 Foregone segment margin in the West region Additional contribution margin in the East region Increase (decrease) in profits if the West region is dropped 15. Additional advertising Additional contribution margin in the West region Increase in profits Desired Inventory, December 31 Expected sales, last quarter Total needs Less inventory, September 30 Required production $24.00 $14.00 $2.00 $4.00 $800,000.00 $496,000.00 Ethics Challenge The Foundational 15 Total Contribution margin Net operating income Profit = 1 2 Variable expenses 3 Sales Variable costs per unit Manufacturing: Direct Materials Direct Labor …