Territory and Product Profitability Analysis Pipeline 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 $350 $300 Variable cost of goods sold per unit (130) (138) Manufacturing margin per unit $220 $162 Variable selling expense per unit Contribution margin per unit (157) $63 (84) $78 The sales unit volume for the sales territories and products for the period is as follows: Atlantic Wave Pacific Pounder East Coast West Coast 2,840 1,420 0 1,420 a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places. Pipeline Surfboards Inc. Contribution Margin by Territory Line Item Description East Coast West Coast Contribution margin ratio % % b. What advice would you give to the management of Pipeline Surfboards regarding the relative profitability of the two territories? The total contribution margin is for the East Coast, while the contribution margin ratio is to improve the company's profitability, it is for West Coast. This is because East Coast sells only Atlantic Wave, which have a that changing the mix of products to the two territories will have much effect. In addition, the variable selling expenses per unit for the contribution margin per unit. In attempting may be too high.