a. 2. Interpret the report.Paul earns thebecause he sells thecontribution margin and has theunits, has amanufacturing margin. Steve also sells products with acommission rate. Colleen has thebut at asalespersons. Although Rene has a high variable cost of goods sold and also sells products with aprice per unit, she has the secondtotal contribution margin.Havasu Off-Road Inc.Contribution Margin by Territoryb. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded toone decimal place.Contribution margin ratioNortheast%contribution margin ratio. This iscommission rate, and sells a product mix with aaverage manufacturing margincontribution margin ratio among the fourSouthwest%average salesb. 2. Interpret the report,The Southwest Region has $more sales and $salesperson with the highest sales unit volume, has thetheperformance, even though it also has the salesperson with theratio. The Northeast Region contribution margin isperformance ofmore contribution margin. In the Southwest Region, thecontribution margin ratio. The Southwest Region hascontribution marginthan the Southwest Region because of the outstanding Sales Territory and Salesperson Profitability AnalysisHavasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are twosalespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following salesstatistics are available for each salesperson:Average per unit:Sales priceVariable cost of goods soldCommission rateUnits soldManufacturing margin ratioContribution margin ratioRene%Steve%NortheastReneColleenSteve%$15,500 $16,000 $14,000 $18,000$9,300$8,000 $8,400$9,0008%12%10%3640%$2450%a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson.Havasu Off-Road Inc.Contribution Margin by SalespersonPaulSouthwestColleen%Paul4040%8%6050%

a. 2. Interpret the report. Paul earns the because he sells the contribution margin and has the units, has a manufacturing margin. Steve also sells products with a commission rate. Colleen has the but at a salespersons. Although Rene has a high variable cost of goods sold and also sells products with a price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Contribution margin ratio b. 2. Interpret the report. Northeast % contribution margin ratio. This is commission rate, and sells a product mix with a average manufacturing margin contribution margin ratio among the four average sal Southwest % more contribution margin. In the Southwest Region, the contribution margin ratio. The Southwest Region has contribution margim The Southwest Region has more sales and $ salesperson with the highest sales unit volume, has the the performance, even though it also has the salesperson with the ratio. The Northeast Region contribution margin is performance of than the Southwest Region because of the outstanding

a. 2. Interpret the report. Paul earns the because he sells the contribution margin and has the units, has a manufacturing margin. Steve also sells products with a commission rate. Colleen has the but at a salespersons. Although Rene has a high variable cost of goods sold and also sells products with a price per unit, she has the second total contribution margin. b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc. Contribution Margin by Territory Contribution margin ratio b. 2. Interpret the report. Northeast % contribution margin ratio. This is commission rate, and sells a product mix with a average manufacturing margin contribution margin ratio among the four average sal Southwest % more contribution margin. In the Southwest Region, the contribution margin ratio. The Southwest Region has contribution margim The Southwest Region has more sales and $ salesperson with the highest sales unit volume, has the the performance, even though it also has the salesperson with the ratio. The Northeast Region contribution margin is performance of than the Southwest Region because of the outstanding

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company's product sells at $12.26 per unit and has a $5.39 per unit variable cost. The company's total fixed costs are $96,700. The contribution margin per unit is:
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Each of a company's two product lines has a different contribution margin ratio . If the company's total sales remain the same but the sales mix shifts toward selling more of the product with the higher contribution ratio , which of the following is true ? O a Fixed cost will be constant . . the breakeven point will decrease . Ocall of the answers are true . d the average contribution margin ratio will increase . O e operating income will increase
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