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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 | $4,400 | $2,800 | ||
Variable cost of goods sold | (2,770) | (1,880) | ||
Manufacturing margin | $1,630 | $920 | ||
Variable selling expenses | (882) | (472) | ||
Contribution margin | $748 | $448 | ||
Fixed expenses | (350) | (180) | ||
Operating income | $398 | $268 |
In addition, the following sales unit volume information for the period is as follows:
Conquistador | Hurricane | |||
Sales unit volume | 1,900 | 1,400 |
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 | ||
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable cost of goods soldVariable cost of goods sold | ||
Contribution marginCost of goods soldFixed manufacturing costsGross profitManufacturing marginManufacturing margin | ||
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable selling expensesVariable selling expenses | ||
Contribution marginCost of goods manufacturedFixed manufacturing costsFixed salesManufacturing marginContribution margin | ||
Contribution margin ratioFixed manufacturing costsFixed salesManufacturing marginVariable cost of goods soldContribution margin ratio |
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