Prepare a contribution margin by product report

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Reference no: EM133088359

Question - 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

$2,800

Variable cost of goods sold

(2,900)

(1,880)

Manufacturing margin

$1,700

$920

Variable selling expenses

(642)

(332)

Contribution margin

$1,058

$588

Fixed expenses

(500)

(240)

Operating income

$558

$348

In addition, the following sales unit volume information for the period is as follows:

 

Conquistador

Hurricane

Sales unit volume

1,800

1,400

Required -

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?

Reference no: EM133088359

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