### Territory and Product Profitability Analysis**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:#### Surfboard Financial Details- **Atlantic Wave** - Sales price: $400 - Variable cost of goods sold per unit: $(148) - Manufacturing margin per unit: $252 - Variable selling expense per unit: $(164) - Contribution margin per unit: $88- **Pacific Pounder** - Sales price: $350 - Variable cost of goods sold per unit: $(165) - Manufacturing margin per unit: $185 - Variable selling expense per unit: $(94) - Contribution margin per unit: $91#### Sales Unit Volume by TerritoryThe sales unit volume for the territories and products for the period is as follows:- **East Coast** - Atlantic Wave: 2,500 units - Pacific Pounder: 0 units- **West Coast** - Atlantic Wave: 1,250 units - Pacific Pounder: 1,250 units#### Contribution Margin ReportPrepare 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**The report and calculations will include contribution margins and ratios for East Coast and West Coast regions, highlighting the profitability of the two surfboard types by territory.[No graphs or diagrams present on the image] **Contribution Margin by Territory**| | East Coast | West Coast ||-----------------------|------------|------------|| **Sales** | $ | $ || **Variable cost of goods sold** | $ | $ || **Manufacturing margin** | $ | $ || **Variable selling expenses** | $ | $ || **Contribution margin** | $ | $ |**Contribution margin ratio** | % | %**Feedback:**- **Check My Work** a. To recast the contribution margin data by sales territory report, multiply the sales volume by each per unit amount. To calculate the contribution margin ratio, divide the contribution margin by sales.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 **slightly lower** ✓ for the East Coast, while the contribution margin ratio is **slightly higher** ✓ for West Coast. This is because East Coast sells only Atlantic Wave, which have a **lower** ✓ contribution margin ratio but a **lower** ✓ contribution margin per unit. In attempting to improve the company’s profitability, it is **unlikely** ✓ that changing the mix of products to the two territories will have much effect. **Options**: - Check My Work- Save and Exit- Submit Assignment for Grading(All work saved.)

Contribution means sales minus varibale cost and when we divide contribution with sale , we get…

Answered: East Coast West Coast Sales V Variable…

East Coast West Coast Sales V Variable cost of goods sold v Manufacturing margin v Variable selling expenses v Contribution margin v Contribution margin ratio

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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