Territory and Product Profitability Analysis Pipeline 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: Atlantic Wave Pacific Pounder Atlantic Wave Pacific Pounder Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit The sales unit volume for the sales territories and products for the period is as follows: East Coast West Coast 1,290 1,290 2,580 0 Pipeline Surfboards Inc. Contribution Margin by Territory $450 (167) $283 (193) $90 a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places. Line Item Description East Coast West Coast E E $400 (192) $208 (112) $96 25 > 62 9)
Territory and Product Profitability Analysis Pipeline 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: Atlantic Wave Pacific Pounder Atlantic Wave Pacific Pounder Sales price Variable cost of goods sold per unit Manufacturing margin per unit Variable selling expense per unit Contribution margin per unit The sales unit volume for the sales territories and products for the period is as follows: East Coast West Coast 1,290 1,290 2,580 0 Pipeline Surfboards Inc. Contribution Margin by Territory $450 (167) $283 (193) $90 a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution margin ratio answers to two decimal places. Line Item Description East Coast West Coast E E $400 (192) $208 (112) $96 25 > 62 9)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution
margin ratio answers to two decimal places.
Pipeline Surfboards Inc.
Contribution Margin by Territory
Line Item Description East Coast
Contribution margin ratio,
%
West Coast
%
b. What advice would you give to the management of Pipeline Surfboards regarding the relative profitability of the two territories?
The total contribution margin is
for the East Coast, while the contribution margin ratio is
contribution margin per unit. In
for West Coast. This is because East Coast sells only Atlantic Wave, which have a
attempting to improve the company's profitability, it is (
that changing the mix of products to the two territories will
may be too high.
have much effect. In addition, the variable selling expenses per unit for the
Transcribed Image Text:Territory and Product Profitability Analysis
Pipeline 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:
Atlantic Wave
Pacific Pounder
Atlantic Wave
Pacific Pounder
Sales price
Variable cost of goods sold per unit
Manufacturing margin per unit
Variable selling expense per unit
Contribution margin per unit
The sales unit volume for the sales territories and products for the period is as follows:
East Coast
West Coast
1,290
1,290
2,580
0
Pipeline Surfboards Inc.
Contribution Margin by Territory
$450
(167)
$283
(193)
$90
a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory. Round contribution
margin ratio answers to two decimal places.
Line Item Description East Coast
West Coast
E
E
$400
(192)
$208
(112)
$96
25
>
62
9)
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