Assignment
Diego Company manufactures one product that is sold for $72 per unit. The following information pertains to the company's first year of operations in which it produced 43,000 units and sold 38,000 units.
Variable costs per unit:
Manufacturing:
Direct materials $22
Direct labour $14
Variable manufacturing overhead $3
Variable selling and administrative $5
Fixed costs per year:
Fixed manufacturing overhead $774,000
Fixed selling and administrative expenses $346,000
Task
A. What is the unit product cost under variable costing?
B. What is the unit product cost under absorption costing?
C. What is the company's total contribution margin under variable costing?
D. What is the company's net operating income under variable costing?
E. What is the company's total gross margin under absorption costing?
F. What is the company's net operating income (loss) under absorption costing?
G. What is the amount of the difference between the variable costing and absorption costing net operating incomes (losses)?
H. What is the company's break-even point in unit sales? Is it above or below the actual sales volume?
I. What would have been the company's variable costing net operating income (loss) if it had produced and sold 38,000 units?
J. What would have been the company's absorption costing net operating income (loss) if it had produced and sold 38,000 units?