Product Profitability Analysis

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	$6,600		$4,400
Variable cost of goods sold	(4,160)		(2,950)
Manufacturing margin	$2,440		$1,450
Variable selling expenses	(922)		(614)
Contribution margin	$1,518		$836
Fixed expenses	(710)		(330)
Operating income	$808		$506

In addition, the following sales unit volume information for the period is as follows:

	Conquistador		Hurricane
Sales unit volume	2,600		1,900

Question Content Area

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

	Conquistador	Hurricane

	$Sales	$Sales

	Variable cost of goods sold	Variable cost of goods sold

	$Manufacturing margin	$Manufacturing margin

	Variable selling expenses	Variable selling expenses

$Contribution margin

$Contribution margin