Assistance with below please 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 $3,600 Variable cost of goods sold (3,530)
Assistance with below please
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 | $3,600 | ||
| Variable cost of goods sold | (3,530) | (2,410) | ||
| Manufacturing margin | $2,070 | $1,190 | ||
| Variable selling expenses | (950) | (650) | ||
| Contribution margin | $1,120 | $540 | ||
| Fixed expenses | (530) | (220) | ||
| Operating income | $590 | $320 |
In addition, the following sales unit volume information for the period is as follows:
| Conquistador | Hurricane | |||
| Sales unit volume | 2,200 | 1,600 |
Question Content Area
a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.
| Conquistador | Hurricane | |
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- Select -% | - Select -% |
Question Content Area
b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products?
The
line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more toward the
line, the overall profitability of the company would increase.
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