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 | $5,800 | $3,800 | ||
Variable cost of goods sold | (3,650) | (2,550) | ||
Manufacturing margin | $2,150 | $1,250 | ||
Variable selling expenses | (816) | (680) | ||
Contribution margin | $1,334 | $570 | ||
Fixed expenses | (630) | (230) | ||
Operating income | $704 | $340 |
In addition, the following sales unit volume information for the period is as follows:
Conquistador | Hurricane | |||
Sales unit volume | 3,200 | 2,300 |
a. Prepare 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% |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started