Sales Territory and Salesperson Profitability Analysis Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson: Line Item Description Northeast Rene Northeast Steve Southwest Colleen Southwest Paul Average per unit: Sales price $15,500 $16,000 $14,000 $18,000 Variable cost of goods sold $9,300 $8,000 $8,400 $9,000 Commission rate 8% 12% 10% 8% Units sold 36 24 40 60 Manufacturing margin ratio 40% 50% 40% 50% Question Content Area a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson. Havasu Off-Road Inc.Contribution Margin by Salesperson Line Item Description Rene Steve Colleen Paul Contribution margin ratio Question Content Area a. 2. Interpret the report. Paul earns the contribution margin and has the contribution margin ratio. This is because he sells the units, has a commission rate, and sells a product mix with a manufacturing margin. Steve also sells products with a average manufacturing margin but at a commission rate. Colleen has the contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a average sales price per unit, she has the second total contribution margin. Question Content Area b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place. Havasu Off-Road Inc.Contribution Margin by Territory Line Item Description Northeast Southwest Contribution margin ratio Question Content Area b. 2. Interpret the report. The Southwest Region has more sales and more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the contribution margin ratio. The Southwest Region has the performance, even though it also has the salesperson with the contribution margin ratio. The Northeast Region contribution margin is than the Southwest Region because of the outstanding performance of
Sales Territory and Salesperson Profitability Analysis
Havasu Off-Road Inc. manufactures and sells a variety of commercial vehicles in the Northeast and Southwest regions. There are two salespersons assigned to each territory. Higher commission rates go to the most experienced salespersons. The following sales statistics are available for each salesperson:
| Line Item Description | Northeast Rene |
Northeast Steve |
Southwest Colleen |
Southwest Paul |
|---|---|---|---|---|
| Average per unit: | ||||
| Sales price | $15,500 | $16,000 | $14,000 | $18,000 |
| Variable cost of goods sold | $9,300 | $8,000 | $8,400 | $9,000 |
| Commission rate | 8% | 12% | 10% | 8% |
| Units sold | 36 | 24 | 40 | 60 |
| Manufacturing margin ratio | 40% | 50% | 40% | 50% |
Question Content Area
a. 1. Prepare a contribution margin by salesperson report. Compute the contribution margin ratio for each salesperson.
| Line Item Description | Rene | Steve | Colleen | Paul |
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| Contribution margin ratio |
Question Content Area
a. 2. Interpret the report.
Paul earns the
contribution margin and has the
contribution margin ratio. This is because he sells the
units, has a
commission rate, and sells a product mix with a
manufacturing margin. Steve also sells products with a
average manufacturing margin but at a
commission rate. Colleen has the
contribution margin ratio among the four salespersons. Although Rene has a high variable cost of goods sold and also sells products with a
average sales price per unit, she has the second
total contribution margin.
Question Content Area
b. 1. Prepare a contribution margin by territory report. Compute the contribution margin for each territory as a percent, rounded to one decimal place.
| Line Item Description | Northeast | Southwest |
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| Contribution margin ratio |
Question Content Area
b. 2. Interpret the report.
The Southwest Region has more sales and more contribution margin. In the Southwest Region, the salesperson with the highest sales unit volume, has the
contribution margin ratio. The Southwest Region has the
performance, even though it also has the salesperson with the
contribution margin ratio. The Northeast Region contribution margin is
than the Southwest Region because of the outstanding performance of
.
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