Question
Territory and Product Profitability Analysis Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold
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 $300 $250 Variable cost of goods sold per unit (111) (123) Manufacturing margin per unit $189 $127 Variable selling expense per unit Contribution margin per unit (135) $54 (67) $60 The sales unit volume for the sales territories and products for the period is as follows: Atlantic Wave Pacific Pounder East Coast West Coast 3,300 1,650 0 1,650 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 Sales Variable cost of goods sold East Coast West Coast 990,000 907,500 366,300 386,100 Manufacturing margin 623,700 521,400 Variable selling expenses 445,500 333,300 Contribution margin 178,200 188,100 Contribution margin ratio 18 % 20 X %
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