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 $252 $183 Variable cost of goods sold per unit 99 99 Manufacturing margin per unit $153 $84 Variable selling expense per unit 136 72 Contribution margin per unit $17 $12 The sales unit volume for the territories and products for the period is as follows: East Coast West Coast Atlantic Wave 25,000 17,500 Pacific Pounder 17,500 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 Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Contribution margin ratio Feedback Check My WorkFeedback Check My Work To recast the contribution margin data by sales territory report, multiply the sales volume by each per unit amount. To calculate the contribution margin ratio, divide the contribution margin by sales. Learning Objective 4 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 _ v and the contribution margin ratio is higher V 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 manufacturing margin per unit is $ while the Pacific Pounder's is $ . And the Atlantic Wave's variable selling expense per unit is $ while the Pacific Pounder's is $ With an eye on improving profitability, modifying the product mix within the two territories would be ineffective _ v . Additionally, the company should review the variable costs V . The variable cost of goods sold V could shed light on manufacturing inefficiencies. Also, a review of Atlantic Wave's - v variable selling expense per unit could also help with profitability. Feedback Check My Work Partially correct Feedback Check My Work Partially correct