7.4

Territory and Product Profitability Analysis

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 Wave		Pacific Pounder
Sales price	$350		$250
Variable cost of goods sold per unit	(130)		(123)
Manufacturing margin per unit	$220		$127
Variable selling expense per unit	(157)		(62)
Contribution margin per unit	$63		$65

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

	East Coast		West Coast
Atlantic Wave	2,960		1,480
Pacific Pounder	0		1,480

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

Coast to Coast Surfboards Inc.
Contribution Margin by Territory
	East Coast	West Coast
Sales
Variable cost of goods sold
Manufacturing margin
Variable selling expenses
Contribution margin
Contribution margin ratio