Solution-Prepare a contribution margin by product report

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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Prepare a contribution margin by product report

Reference no: EM133088359

Reference no: EM133088359

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