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 $5,200 $3,200 Variable cost of goods sold (3,280) (2,140) Manufacturing margin $1,920 $1,060 Variable seling expenses (776) (612) Contribution margin $1,144 $448 Fixed expenses (540) (180) Operating income $604 $260 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 1,300 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 Hurricane Conquistador 9.360,000 Sales 4.160,000 Variable cost of goods sold 7.300.00 X 3.577.600 x 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 Hurricane Conquistador 9.360,000 4.160,000 7.300,000 X 3,577.600 X 2,059,200 X $ 582.400 X Sales Variable cost of goods sold Contribution margin Fixed cost of goods sold Fixed sales X Contribution margin ratio 972.000 x 234,000 x 1,037.200 x 348,400X 22 14 Feedback Check My Work To recast the contribution margin data by product report, multiply the sales volume by each per unit amount. To calculate the contribution margin ratio, di the contribution margin by sales b. What advice would you give to the management of Galaxy Sports Inc regarding the profitability of the two products The Conquistador line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more towan Hurricane X line, the overall profitability of the company would increase