Havasu Off-Road Inc. manufactures and sells 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 Rene Steve Colleen Paul Average per unit: Sales price $15,500 $16,000 $14,000 $18,000 Variable cost of goods sold $9,300 $8,000 $8,400 $9,000 Commission rate 8

a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson.

Havasu Off-Road Inc. Contribution Margin by Salesperson

	Rene	Steve	Colleen	Paul
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -	$- Select -	$- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	- Select -	- Select -	- Select -	- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -	$- Select -	$- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	- Select -	- Select -	- Select -	- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -	$- Select -	$- Select -
Contribution margin ratio	fill in the blank bd9fe8074ff2011_26%	fill in the blank bd9fe8074ff2011_27%	fill in the blank bd9fe8074ff2011_28%	fill in the blank bd9fe8074ff2011_29%

Question Content Area

a. 2. Interpret the report.

Paul earns the

highestlowest

contribution margin and has the

highestlowest

contribution margin ratio. This is because he sells the

mostleast

units, has a

highlow

commission rate, and sells a product mix with a

highlow

manufacturing margin. Steve also sells products with a

highlow

average manufacturing margin but at a

highlow

commission rate. Colleen has the

bestpoorest

contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a

highlow

average sales price per unit, she has the second

highestlowest

total contribution margin.

Question Content Area

b. 1. Prepare a contribution margin by territory report. Compute 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 marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	- Select -	- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	- Select -	- Select -
Contribution marginManufacturing marginSalesVariable cost of goods soldVariable commission expense	$- Select -	$- Select -
Contribution margin ratio	fill in the blank 1f322b009065fff_16%	fill in the blank 1f322b009065fff_17%

Question Content Area

b. 2. Interpret the report.

The Southwest Region has $fill in the blank ae0767fd4fc206c_1 more sales and $fill in the blank ae0767fd4fc206c_2 more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the

highestlowest

contribution margin ratio. The Southwest Region has the

highestlowest

performance, even though it also has the salesperson with the

highestlowest

contribution margin ratio. The Northeast Region contribution margin is

moreless

than the Southwest Region because of the outstanding performance of

PaulColleen

.