Coast to Coast 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: Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit Atlantic Wave Pacific Pounder East Coast West Coast The sales unit volume for the territories and products for the period is as follows: 3,440 0 1,720 1,720 Contribution margin ratio a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc. Contribution Margin by Territory East Coast Atlantic Wave % $300 (111) $189 (129) $60 $ West Coast $ Pacific Pounder $250 (118) $132 (67) $65 % b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories? The total contribution margin is Coast, while the contribution margin ratio is for West Coast. This is because East Coast sells only Atlantic Wave, which have a contribution margin ratio but a contribution margin per unit. In attempting to improve the company's profitability, that changing the mix of products to it is for the East the two territories will have much effect. In addition, the variable selling expenses per unit for the may be too high.
Coast to Coast 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: Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit Atlantic Wave Pacific Pounder East Coast West Coast The sales unit volume for the territories and products for the period is as follows: 3,440 0 1,720 1,720 Contribution margin ratio a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc. Contribution Margin by Territory East Coast Atlantic Wave % $300 (111) $189 (129) $60 $ West Coast $ Pacific Pounder $250 (118) $132 (67) $65 % b. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories? The total contribution margin is Coast, while the contribution margin ratio is for West Coast. This is because East Coast sells only Atlantic Wave, which have a contribution margin ratio but a contribution margin per unit. In attempting to improve the company's profitability, that changing the mix of products to it is for the East the two territories will have much effect. In addition, the variable selling expenses per unit for the may be too high.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Coast to Coast 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:
Sales price
Variable cost of goods sold per unit
Manufacturing margin per unit
Variable selling expense per unit
Contribution margin per unit
Atlantic Wave
Pacific Pounder
East Coast West Coast
The sales unit volume for the territories and products for
the period is as follows:
3,440
0
1,720
1,720
Contribution margin ratio
Coast to Coast Surfboards Inc.
Contribution Margin by Territory
Atlantic Wave
a. Prepare a contribution margin by sales territory report.
Compute the contribution margin ratio for each territory as
a whole percent, rounded to two decimal places, if
required.
%
$300
(111)
$189
(129)
$60
East Coast West Coast
$
$
Pacific Pounder
$250
(118)
$132
(67)
$65
%
b. What advice would you give to the management of
Coast to Coast Surfboards regarding the relative
profitability of the two territories?
The total contribution margin is
Coast, while the contribution margin ratio is
for West Coast. This is because East Coast sells only
Atlantic Wave, which have a
contribution
margin ratio but a
contribution margin per
unit. In attempting to improve the company's profitability,
that changing the mix of products to
it is
for the East
the two territories will have much effect. In addition, the
variable selling expenses per unit for the
may be too high.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education