Product Profitability AnalysisGalaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products: ConquistadorHurricaneSales price$5,600 $3,400 Variable cost of goods sold(3,530) (2,280) Manufacturing margin$2,070 $1,120 Variable selling expenses(782) (644) Contribution margin$1,288 $476 Fixed expenses(610) (190) Operating income$678 $286 In addition, the following sales unit volume information for the period is as follows: ConquistadorHurricaneSales unit volume3,300 2,400 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.Galaxy Sports Inc.Contribution Margin by Product ConquistadorHurricane $Sales$Sales Variable cost of goods soldVariable cost of goods sold $Manufacturing margin$Manufacturing margin Variable selling expensesVariable selling expenses $Contribution margin$Contribution margin Contribution margin ratio%Contribution margin ratio% b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two pro

Contribution margin is the excess of sales over variable cost. It is calculated as ; Contribution…

Answered: . Prepare a contribution margin by…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Product Profitability Analysis

Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Conquistador and Hurricane, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:

	Conquistador	Hurricane
Sales price	$5,600		$3,400
Variable cost of goods sold	(3,530)		(2,280)
Manufacturing margin	$2,070		$1,120
Variable selling expenses	(782)		(644)
Contribution margin	$1,288		$476
Fixed expenses	(610)		(190)
Operating income	$678		$286

In addition, the following sales unit volume information for the period is as follows:

	Conquistador	Hurricane
Sales unit volume	3,300		2,400

a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.

Galaxy Sports Inc.Contribution Margin by Product

	Conquistador	Hurricane
	$Sales	$Sales
	Variable cost of goods sold	Variable cost of goods sold
	$Manufacturing margin	$Manufacturing margin
	Variable selling expenses	Variable selling expenses
	$Contribution margin	$Contribution margin
	Contribution margin ratio%	Contribution margin ratio%

b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two pro

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