Ch. 6 HW eBook Show Me How Sales Territory and Salesperson Profitability Analysis Havasu Off-Road Inc. manufactures and se is a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson: Northeast Southwest Colleen Paul Rene Steve Average per unit: $18,800 $9,024 Sales price Variable cost of youds sald Commission rate Units sold $10,600 $14,900 $9,800 $6,360 SB,344 $6,272 79% 14% 11% 35 25 40 109 44% 35% 99% 26 Manufacturing mergin raliu 52% a. 1. Prepare a contribution margin by salesperson report. Calculate the contribution margin ratia for each salesperson. If required, round contribution margin ratio to one decimal place. Havasu Off-Road Inc. Contribution Margin by Salesperson Rene Steve Colleen Paul $ $ $ $ 96 Contribution margin ratia Yo 9 a. 2. Interpret the report. Paul earns the contribution margin and has the contribution margin ratia. This is because he sells the units, has a commission rate, and sells a product mix with a manufacturing margin. Stryn also sells products with a average manufacturing margin but at a commission rate, Calleon has the contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a average sales price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory report, Calculate the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contributinn Mannin hu Territory Check My Work Previous Assignment Score: 11.11% Email Instructor Save and Exit Subrnit Assignment for Grading Ch. 6 HW eBook Show Me How 0 Rene Steve Colleen Paul $ $ S Contribution margin ratio % % a. 2. Interpret the report. Paul earns the contribution margin and has the contribution margin ratio. This is because he sells the units, has a commission rate, and sells a product mix with a manufacturing margin. Steve also sells products with a average manufacturing margin but at a commission rate, Calleen has the Contribution margin ratia among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a average sales price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory repart. Calculate the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Northeast Southwest $ $ Contribution margin ratio 96 9 b. 2. Interpret the report The Southwest Region has s more sales and s more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the contribution margin ratio. The Southwest Region has the performance, even though it also has the salesperson with the contribution margin and contribution margin ratio, The Northeast Region contribution margin is than the Southwest Region because of the outstanding performance of Check My Work Assignment Score: 11.11% Email Instructor Save and Exit Subrnita Change in Sales Mix and Contribution Margin Head Pops Inc. manufactures two models of solar-powered, noise-canceling headphones: Sun Sound and Ear Bling models. The company is operating at less than full capacity. Market research indicates that 18,700 additional Sun Sound and 20,600 additional Ear Bling headphones could be sold. The income from operations by unit of product is as follows: Sun Sound Ear Bling Headphones Headphones 555.70 $35.70 20.00 31.20 $15.70 S24.50 Sales price Variable cost of goods sold Manufacturing margin Variable selling and administrative expenses Contribution margin Fixed manufacturing costs 7.10 11.10 $8.60 $13.40 5.00 3.20 Income from operations $5.40 $8.40 Prepare an analysis indicating the increase or decrease in total profitability if 18,700 additional Sun Sound and 20,600 additional Ear Bling headphones are produced and sold, assuming that there is sufficient capacity for the additional production. Round your per unit answers to two decimal place. Head Pops Inc. Analysis Sun Sound Headphones Ear Bling Headphones 18.700 20,600 Unit volume increase x Contribution margin per unit Increase in profitability $ Fachack Oruck My Work Fixed costs should be excluded when determining the incremental income for operations, because they will not be affected by the decision. Learning Objective 4
