Question
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.
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 | $4,200 | $2,800 | ||
Variable cost of goods sold | (2,650) | (1,880) | ||
Manufacturing margin | $1,550 | $920 | ||
Variable selling expenses | (752) | (416) | ||
Contribution margin | $798 | $504 | ||
Fixed expenses | (380) | (200) | ||
Operating income | $418 | $304 |
In addition, the following sales unit volume information for the period is as follows:
Conquistador | Hurricane | |||
Sales unit volume | 3,000 | 2,200 |
Question Content Area
a. A contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.
Conquistador | Hurricane | |
Contribution marginCost of goods soldDirect laborGross profitSalesSales | $Sales | $Sales |
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable cost of goods soldVariable cost of goods sold | Variable cost of goods sold | Variable cost of goods sold |
Contribution marginCost of goods soldFixed manufacturing costsGross profitManufacturing marginManufacturing margin | $Manufacturing margin | $Manufacturing margin |
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable selling expensesVariable selling expenses | Variable selling expenses | Variable selling expenses |
Contribution marginCost of goods manufacturedFixed manufacturing costsFixed salesManufacturing marginContribution margin | $Contribution margin | $Contribution margin |
Contribution margin ratioFixed manufacturing costsFixed salesManufacturing marginVariable cost of goods soldContribution margin ratio | Contribution margin ratio% | Contribution margin ratio% |
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