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Prepare a contribution margin by product report

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Reference no: EM133175501

Question - 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

$5,400

$3,600

Variable cost of goods sold

(3,400)

(2,410)

Manufacturing margin

$2,000

$1,190

Variable selling expenses

(920)

(650)

Contribution margin

$1,080

$540

Fixed expenses

(510)

(220)

Operating income

$570

$320

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

 

Conquistador

Hurricane

Sales unit volume

1,900

1,300

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: EM133175501

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