Pipeline Surfboards Inc. manufactures and sells two styles of surfboards, Atlantic Wave and Pacific Pounder. These surfboards are sold in two regions, East Coast and West Coast. Information about the two surfboards is as follows:

The sales unit volume for the sales territories and products for the period is as follows:

a. Prepare a contribution margin by sales territory report. Compute the contribution margin ratio for each territory as a whole percent.
b. What advice would you give to the management of Pipeline Surfboards regarding the relative profitability of the two territories?

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Sales price.......... Variable cost of goods sold per unit... Manufacturing margin per unit .... Variable selling expense per unit...... Contribution margin per unit..... Atlantic Wave $ 500 (300) $ 200 (75) $ 125 Pacific Pounder $ 800 (500) $ 300 (60) $ 240