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 $6,400 $4,000 Variable cost of goods sold (4,030) (2,680) Manufacturing margin $2,370 $1,320 Variable selling expenses (1,346) (720) Contribution margin $1,024 $600 Fixed expenses (480) (240) Operating income $544 $360 In addition, the following sales unit volume information for the period is as follows: Sales unit volume Conquistador 2,500 Hurricane 1,800 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 Operating Income $544 $360 In addition, the following sales unit volume Information for the period is as follows: Sales unit volume Conquistador 2,500 Hurricane 1,800 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 b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products? The toward the line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more line, the overall profitability of the company would increase. Check My Work Next