4&5 chap 20

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:

1		Atlantic Wave	Pacific Pounder
2	Sales price	$302.00	$152.00
3	Variable cost of goods sold per unit	113.00	57.00
4	Manufacturing margin per unit	$189.00	$95.00
5	Variable selling expense per unit	162.00	76.00
6	Contribution margin per unit	$27.00	$19.00

The sales unit volume for the sales territories and products for the period is as follows:

	East Coast	West Coast
Atlantic Wave	20,000	5,000
Pacific Pounder	0	5,000

a.

Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

b.

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

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:

1		Atlantic Wave	Pacific Pounder
2	Sales price	$302.00	$152.00
3	Variable cost of goods sold per unit	113.00	57.00
4	Manufacturing margin per unit	$189.00	$95.00
5	Variable selling expense per unit	162.00	76.00
6	Contribution margin per unit	$27.00	$19.00

The sales unit volume for the sales territories and products for the period is as follows:

	East Coast	West Coast
Atlantic Wave	20,000	5,000
Pacific Pounder	0	5,000

a.	Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
b.	What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?