What is the company break-even point in unit sales

Assignment Help Accounting Basics

Reference no: EM132216877

Question - Diego Company manufactures one product that is sold for $73 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 44,000 units and sold 39,000 units. Variable costs per unit: Manufacturing: Direct materials $23 Direct labor $16 Variable manufacturing overhead $2 Variable selling and administrative $4 Fixed costs per year: Fixed manufacturing overhead $ 748,000 Fixed selling and administrative expense $400,000 The Company sold 29,000 units in the East region and 10,000 units in the West region. It determined that $180,000 of its fixed selling and administrative expense is traceable to the West region, $130,000 is traceable to the East region, and the remaining $90,000 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.

1. What is the company's total gross margin under absorption costing?

2. What is the company's net operating income (loss) under absorption costing?

3. What is the company's break-even point in unit sales?

4. What would have been the company's variable costing net operating income (loss) if it had produced and sold 39,000 units? You do not need to perform any calculations to answer this question.

5. Assume the West region invests $34,000 in a new advertising campaign in Year 2 that increases its unit sales by 20%. If all else remains constant, what would be the profit impact of pursuing the advertising campaign?

Reference no: EM132216877

Questions Cloud

Affect dental office completion of project goals : Create a list of possible adverse situations that might affect a dental office completion of project goals.

What are frames and how do they work in negotiations : How do you feel about the question, "is it legal to lie?" Do you agree or disagree with the statement? Give an explanation for your answer using evidence.

Is there still an opportunity to exceed their expectations : If you were to come into contact with someone like this (or have) at your work site, what would be (or is) your strategy/method of dealing with them?

Describe range of diagnostic instruments relevant : Describe a range of diagnostic instruments relevant to various aspects of the process of managing

What is the company break-even point in unit sales : Diego Company manufactures one product that is sold for $73 per unit, What is the company's break-even point in unit sales

Differences between males and females : What is the most suitable name for the culturally and socially fashioned differences between males and females?

Create a portfolio of deliverables to support the executive : As one of the company's executives you will be tasked with preparing the lead executive for deployment in a foreign country.

Study of population patterns in sociology : The study of population patterns in Sociology involves a prominent use of bar graphs.

What nursing interventions will be best suited : Veteran Hospice Patient- What nursing interventions will be best suited to address comfort concerns in hospice veteran patients? How does aromatherapy help?

User Account

All Pages