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 $4,400 $3,000 Variable cost of goods sold (2,770) (2,010) Manufacturing margin $1,630 $990 Variable selling expenses (750) (450) Contribution margin $880 $540 Fixed expenses (410) (220) Operating income $470 $320 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,100 1,500 Question Content Area 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 blank Conquistador Hurricane $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select -% - Select -% 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 then_________ line, the overall profitability of the company would increase.
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 $4,400 $3,000 Variable cost of goods sold (2,770) (2,010) Manufacturing margin $1,630 $990 Variable selling expenses (750) (450) Contribution margin $880 $540 Fixed expenses (410) (220) Operating income $470 $320 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,100 1,500 Question Content Area 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 blank Conquistador Hurricane $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select -% - Select -% 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 then_________ line, the overall profitability of the company would increase.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 12E: Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the...
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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 | $4,400 | $3,000 | ||
| Variable cost of goods sold | (2,770) | (2,010) | ||
| Manufacturing margin | $1,630 | $990 | ||
| Variable selling expenses | (750) | (450) | ||
| Contribution margin | $880 | $540 | ||
| Fixed expenses | (410) | (220) | ||
| Operating income | $470 | $320 |
In addition, the following sales unit volume information for the period is as follows:
| Conquistador | Hurricane | |||
| Sales unit volume | 2,100 | 1,500 |
Question Content Area
a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.
| Conquistador | Hurricane | |
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$- Select - | $- Select - |
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- Select - | - Select - |
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$- Select - | $- Select - |
|
|
- Select - | - Select - |
|
|
$- Select - | $- Select - |
|
|
- Select -% | - Select -% |
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 then_________ line, the overall profitability of the company would increase.
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