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: Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Conquistador Hurricane $4,000 (2,680) $1.320 (4,030) $2,370 (962) $1,400 (660) Operating income 6748 In addition, the following sales unit volume information for the period is as follows: Conquistador 1,500 (640) $500 (270) $410 2.600 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 Conquistador Hurricane b. What advice would you give to the management of Galaxy Sports Inc. regarding the
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: Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Conquistador Hurricane $4,000 (2,680) $1.320 (4,030) $2,370 (962) $1,400 (660) Operating income 6748 In addition, the following sales unit volume information for the period is as follows: Conquistador 1,500 (640) $500 (270) $410 2.600 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 Conquistador Hurricane b. What advice would you give to the management of Galaxy Sports Inc. regarding the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Accounting

Transcribed Image Text: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:
Variable cost of goods sold
Manufacturing margin
variable selling expenses
Contribution margin
Conquistador
$6,400
(4,030)
$2,370
Sales un volume
(962)
$1,400
Fixed expenses
Operating income
In addition, the following sales unit volume information for the period is as follows:
(660)
1748
Hurricane
$4,000
(2,680)
$1,320
(640)
$500
Conquistador
1,500
(270)
$410
Hurricane
2.500
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
Conquistador Hurricane
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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