Sales unit volume 2,800 2,000 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

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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
$4,600
$3,000
Variable cost of goods sold
(2,900)
(2,010)
Manufacturing margin
$1,700
$990
Variable selling expenses
(872)
(540)
Contribution margin
$828
$450
Fixed expenses
(390)
(180)
Operating income
$438
$270
In addition, the following sales unit volume information for the period is as follows:
Conquistador
Hurricane
Sales unit volume
2,800
2,000
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
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: Conquistador Hurricane Sales price $4,600 $3,000 Variable cost of goods sold (2,900) (2,010) Manufacturing margin $1,700 $990 Variable selling expenses (872) (540) Contribution margin $828 $450 Fixed expenses (390) (180) Operating income $438 $270 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,800 2,000 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
Sales unit volume
2,800
2,000
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.
Transcribed Image Text:Conquistador Hurricane Sales unit volume 2,800 2,000 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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