1. Territory and Product Profitability Analysis

   Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows:

   	Atlantic Wave		Pacific Pounder
   Sales price	$400		$350
   Variable cost of goods sold per unit	(148)		(165)
   Manufacturing margin per unit	$252		$185
   Variable selling expense per unit	(180)		(87)
   Contribution margin per unit	$72		$98

   The sales unit volume for the territories and products for the period is as follows:

   	East Coast		West Coast
   Atlantic Wave	2,960		1,480
   Pacific Pounder	0		1,480

   a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required.

   Coast to Coast Surfboards Inc.
   Contribution Margin by Territory
   	East Coast	West Coast
   	$fill in the blank 10036df2cfe4f87_2	$fill in the blank 10036df2cfe4f87_3
   	fill in the blank 10036df2cfe4f87_5	fill in the blank 10036df2cfe4f87_6
   	$fill in the blank 10036df2cfe4f87_8	$fill in the blank 10036df2cfe4f87_9
   	fill in the blank 10036df2cfe4f87_11	fill in the blank 10036df2cfe4f87_12
   	$fill in the blank 10036df2cfe4f87_14	$fill in the blank 10036df2cfe4f87_15
   Contribution margin ratio	fill in the blank 10036df2cfe4f87_16%	fill in the blank 10036df2cfe4f87_17%

   b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?

   The total contribution margin is for the East Coast, while the contribution margin ratio is for West Coast. This is because East Coast sells only Atlantic Wave, which have a contribution margin ratio but a contribution margin per unit. In attempting to improve the companys profitability, it is that changing the mix of products to the two territories will have much effect. In addition, the variable selling expenses per unit for the may be too high.

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