Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products: Conquistador Hurricane Sales price $6,800 $4,200 Variable cost of goods sold (4,280) (2,810) Manufacturing margin $2,520 $1,390 Variable selling expenses (1,092) (718) Contribution margin $1,428 $672 Fixed expenses (670) (270) Operating income $758 $402 In addition, the following sales unit volume information for the period is as follows: Sales unit volume Conquistador 1,900 Hurricane 1,300 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent. Galaxy Sports Inc. Contribution Margin by Product Line Item Description Sales Conquistador Hurricane 12,920,000 5,460,000 Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Contribution margin ratio % % Variable and Absorption Costing The following data were adapted from a recent income statement of Caterpillar Inc. (CAT) for the year ended December 31: Sales Cost of goods sold Selling, administrative, and other expenses (in millions) $21,610 $(18,370) (1,940) Total expenses Operating income $(20,310) $1,300 Assume that $4,710 million of cost of goods sold and $1,070 million of selling, administrative, and other expenses were fixed costs. Inventories at the beginning and end of Beginning inventory Ending inventory $2,570 2,990 Also, assume that 20% of the beginning and ending inventories were fixed costs. a. Prepare an income statement according to the variable costing concept for Caterpillar Inc. Round numbers to nearest million. Caterpillar Inc. Variable Costing Income Statement (assumed) For the Year Ended December 31 Line Item Description Sales Variable cost of goods sold: (In millions) Beginning inventory Variable cost of goods manufactured Fixed manufacturing costs Total variable cost of goods sold Manufacturing margin Variable cost of goods sold Contribution margin Fixed costs: Fixed manufacturing costs Fixed selling and administrative expenses Total fixed costs Operating income Amount Amount 21,610 Variable Costing Income Statement The following data were adapted from a recent income statement of The Procter & Gamble Company (PG): Sales Operating costs: Cost of products sold (in millions) $247,320 $(118,710) Marketing, administrative, and other expenses (79,140) Total operating costs $(197,850) $49,470 Operating income Assume that the variable amount of each category of operating costs is as follows: Cost of products sold Marketing, administrative, and other expenses (in millions) $66,780 32,150 a. Based on the data given, prepare a variable costing income statement for Procter & Gamble, assuming that the company maintained constant inventory levels during the period. The Procter & Gamble Company Variable Costing Income Statement (assumed) Line Item Description (in millions) Sales Variable cost of products sold Manufacturing margin Variable marketing, administrative, and other expenses Contribution margin Fixed costs: Fixed manufacturing costs Fixed marketing, administrative, and other expenses Total fixed costs Operating income Amount Amount 247,320 66,780 180,540 32,150 148,390