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 $4,600 $2,800 Variable cost of goods sold (2,900) (1,880) Manufacturing margin $1,700 $920 Variable selling expenses (688) (360) Contribution margin $1,012 $560 Fixed expenses (480) (220) Operating income $532 $340 In addition, the following sales unit volume information for the period is as follows: Sales unit volume Conquistador 2,300 Hurricane 1,600 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 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 Sales Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Conquistador Hurricane Contribution margin ratio 22 % 20 % b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products? The Conquistador Conquistador line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more toward the line, the overall profitability of the company would increase