Territory and product profitability analysis obj. 4 Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast.

Information about the two surfboards is as follows:

Atlantic Waves Pacific Pounder Sales price $200 $120 Variable cost of goods sold per unit 150 90 Manufacturing margin per unit $ 50 $ 30 Variable selling expense per unit 34 16 Contribution margin per unit $ 16 $ 14 The sales unit volume for the sales territories and products for the period is as follows:

East Coast West Coast Atlantic Wave 40,000 25,000 Pacific Pounder 0 25,000

a. Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to two decimal places.

b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?