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	$5,000		$3,200
Variable cost of goods sold	(3,150)		(2,140)
Manufacturing margin	$1,850		$1,060
Variable selling expenses	(800)		(580)
Contribution margin	$1,050		$480
Fixed expenses	(490)		(190)
Operating income	$560		$290

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

	Conquistador	Hurricane
Sales unit volume	3,200		2,300

Question Content Area

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 profitSalesCost of goods sold	$Cost of goods sold	$Cost of goods sold
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 marginCost of goods sold	$Cost of goods sold	$Cost of goods sold
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable selling expensesManufacturing margin	Manufacturing margin	Manufacturing margin
Contribution marginCost of goods manufacturedFixed manufacturing costsFixed salesManufacturing marginCost of goods manufactured	$Cost of goods manufactured	$Cost of goods manufactured
Contribution margin ratioFixed manufacturing costsFixed salesManufacturing marginVariable cost of goods soldContribution margin ratio	Contribution margin ratio%	Contribution margin ratio%