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What advice would give to the management of galaxy

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Reference no: EM132960038

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                             $6,400                  $4,200

Variable cost of goods sold          (4,030)               (2,810)

Manufacturing margin                 $2,370                  $1,390

Variable selling expenses                (1,218)                (760)

Contribution margin                        $1,152               $630

Fixed expenses                              (540)                (250)

Operating income                             $612                  $380

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

                                  Conquistador           Hurricane

Sales unit volume                  2,900                  2,200

Problem a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.

Problem b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products?

Reference no: EM132960038

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