The Omega Corporation sells two different lines of bathroom fixtures: standard and deluxe. Omega began its operations in the eastern part of the United States and recently expanded its operations to the western United States. Omega has provided you with the following monthly sales and variable cost data by product and geographical region:

In addition to the above information, you find that Omega currently spends $750,000 each month on fixed costs. By geographical region, $250,000 of the $750,000 is traceable to the Eastern region and $225,000 is traceable to the Western region.
The remaining $275,000 is not traceable to either region. By product, $275,000 of the $750,000 is traceable to the Standard line, whereas $225,000 is traceable to the Deluxe line. The remaining $250,000 is not traceable to either product.

Required:
a. Create a monthly contribution margin statement by geographical region (Eastern and Western) for the Omega Corporation.
b. Create a monthly contribution margin statement by product (Standard and Deluxe) for the Omega Corporation.
c. How might the contribution margin statements you created in parts (a) and (b) assist Omega€™s management in making betterdecisions?

Transcribed Image Text:

Revenue per Month Variable Manufacturing Selling Variable ProdudtEastr RegionWtern RegionCosis Standarod Deluxe As a percentage of sales revenue Eastern Region $1.000,000 $1,000,000 Western Region Costs $400,000 $200,000 55 % 75% 3% 2%