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 Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit The sales unit volume for the territories and products for the period is as follows: $297 $208 $180 160 $20 $91 78 $13 East Coast West Coast 20,000 20,000 Atlantic Wave 30,000 Pacific Pounder a. Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required a. Prepare a contribution margin by sales territory report. Calculate 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 Sales 1000 13,070,000X Variable cost of goods sold 2.200,000x3,080,000X 3,080,000 X Manufacturing margin Variable selling expenses Contribution margin Contribution margin ratio 3,587.500X 3,375,000X 3.000,000 x 000X 375,000 X $437,500 X 6.561% x b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories? The East Coast's total contribution margin is lower and the contribution margin ratio is higher when compared to the West Coast. This, in part, is explained by the single board style for the East Coast as compared to the two styles available in the West Coast. Taking a closer look, the Atlantic Wave's margin per unit is s135 x while the Pacific Pounder'sis 70 . And the Atlantic Wave's variable selling expense per unit 120 X while the Pacific Pounder's is 70X. And the Atlantic Wave's variable selling expense per unit is With an eye on improving profitability, modifying the product mix within the two territories would be ineffective .Additionally, the company should review the variable costs . The variable cost of goods sold could shed light on manufacturing inefficiencies. Also, a review of Atlantic Wave'svariable selling expense per unit could also help with profitability. 60 X