Û Problem Set: Module 6 1. TMM.07.05 2. EX.07.12 ALGO 3. EX.07.02.ALGO 4. EX.07.05.ALGO 5. TMM.07.01 cengagenow.com + ● 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: Sales price Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin. Fixed expenses Operating Income Conquistador $4,800 (3,020) $1,780 (724) Sales unit volume $1,056 (500) $556 In addition, the following sales unit volume information for the period is as follows: Conquistador 3,600 Galaxy Sports Inc. Contribution Margin by Product Hurricane $2,800 (1,880) $920 (500) $420 (170) $250 Conquistador Hurricane 39 Hurricane 2,700 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent. 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.
Û Problem Set: Module 6 1. TMM.07.05 2. EX.07.12 ALGO 3. EX.07.02.ALGO 4. EX.07.05.ALGO 5. TMM.07.01 cengagenow.com + ● 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: Sales price Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin. Fixed expenses Operating Income Conquistador $4,800 (3,020) $1,780 (724) Sales unit volume $1,056 (500) $556 In addition, the following sales unit volume information for the period is as follows: Conquistador 3,600 Galaxy Sports Inc. Contribution Margin by Product Hurricane $2,800 (1,880) $920 (500) $420 (170) $250 Conquistador Hurricane 39 Hurricane 2,700 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Û
Problem Set: Module 6
1. TMM.07.05
2. EX.07.12.ALGO
3. EX.07.02.ALGO
4. EX.07.05.ALGO
5. TMM.07.01
Progress: 2/5 items
engagenow.com
●
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:
Sales price
<Variable cost of goods sold
Manufacturing margin
Variable selling expenses
Contribution margin
Fixed expenses
Operating Income
Sales unit volume
Conquistador
$4,800
(3,020)
$1,780
(724)
$1,056
+ 39
(500)
$556
In addition, the following sales unit volume information for the
period is as follows:
Conquistador
3,600
Galaxy Sports Inc.
Contribution Margin by Product
Check My Work
Hurricane
$2,800
(1,680)
$920
(500)
$420
(170)
$230
$2.50
Conquistador Hurricane
a. Prepare a contribution margin by product report. Compute
the contribution margin ratio for each product as a whole
percent.
Hurricane
2,700
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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