Diego Company manufactures one product that is sold for $70 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first yg of operations in which it produced 53,000 units and sold 48,000 units.
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Variable costs per unit: Manufacturing:
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Direct materials
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$ 21
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Direct labor
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$ 10
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Variable manufacturing overhead
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$ 2
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Variable selling and administrative
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$ 4
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Fixed costs per year:
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Fixed manufacturing overhead
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$ 1,060,000
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Fixed selling and administrative expenses
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$557,000
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The company sold 36,000 units in the East region and 12,000 units in the West region. It determined that $270,000 of its fixed selling and administrative expenses is traceable to the West region, $220,000 is traceable to the East region, and the remaining $67,000 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.
1-Is the fixed manufacturing overhead of $1,060,000 treated as a product cost in both absorption costing and variable costing?
2-What is the unit product cost under variable costing?
3-What is the unit product cost under absorption costing?
4-In the first year, does the company produce more products than it sells? Under absorption costing, does this mean fixed manufacturing overhead costs are released from inventory, or deferred in inventory?
5-What is the company's total contribution margin under variable costing? can you selove these please with steps?