Product Profitability Analysis Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the
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 | $4,200 | $2,800 | ||
Variable cost of goods sold | (2,650) | (1,880) | ||
Manufacturing margin | $1,550 | $920 | ||
Variable selling expenses | (794) | (528) | ||
Contribution margin | $756 | $392 | ||
Fixed expenses | (360) | (160) | ||
Operating income | $396 | $232 |
In addition, the following sales unit volume information for the period is as follows:
Conquistador | Hurricane | |||
Sales unit volume | 1,900 | 1,400 |
Question Content Area
a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent.
Conquistador | Hurricane | |
Contribution marginCost of goods soldDirect laborGross profitSalesSales | $Sales | $Sales |
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable cost of goods soldVariable cost of goods sold | Variable cost of goods sold | Variable cost of goods sold |
Contribution marginCost of goods soldFixed manufacturing costsGross profitManufacturing marginManufacturing margin | $Manufacturing margin | $Manufacturing margin |
Fixed cost of goods soldFixed selling expensesManufacturing marginSalesVariable selling expensesVariable selling expenses | Variable selling expenses | Variable selling expenses |
Contribution marginCost of goods manufacturedFixed manufacturing costsFixed salesManufacturing marginContribution margin | $Contribution margin | $Contribution margin |
Contribution margin ratioFixed manufacturing costsFixed salesManufacturing marginVariable cost of goods soldContribution margin ratio | Contribution margin ratio% | Contribution margin ratio% |
Forensic And Investigative Accounting
ISBN: 9780808056300
10th Edition
Authors: G. Stevenson Smith D. Larry Crumbley, Edmund D. Fenton