Prepare a contribution format segmented income statement that includes a Total c

Question

Prepare a contribution format segmented income statement that includes a Total column and columns for the East and West regions. Diego is considering eliminating the West region because an internally generated report suggests the region's total gross margin in the first year of operations was $79,000 less than its traceable fixed selling and administrative expenses. Diego believes that if it drops the West region, the East region's sales will grow by 5% in Year 2. Using the contribution approach for analyzing segment profitability and assuming all else remains constant in Year 2, what would be the profit impact of dropping the West region in Year 2? '.Assume the West region invests $46,000 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?

Explanation / Answer

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Part 6

Direct materials 24 Direct labor 16 Variable manufacturing overhead 2 unit product cost under variable costing 42

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