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 $$6,800$ $$4,200$

Variable cost of goods sold $(4,280)(2,810)$

Manufacturing margin $$2,520$ $$1,390$

Variable selling expenses $(1,160)(634)$

Contribution margin $$1,360$ $$756$

Fixed expenses $(640)(300)$

Operating income $$720$ $$456$

In addition, the following sales unit volume information for the period is as follows:

Conquistador Hurricane

Sales unit volume $2,4001,800$

Question Content Area

a$.$ Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.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

b$.$ What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products? Conquistador grad$$ line, the overall profitability of the company would increase.