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 $3,000 Variable cost of goods sold (2,900) (2,010) Manufacturing margin $1,700 $990 Variable selling expenses (734) (510) Contribution margin $966 $480 Fixed expenses (450) (190) Operating income $516 $290 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 3,400 2,500 a. Prepare a contribution margin by product report. Compute the contribution margin ratio for each product as a whole percent. Galaxy Sports Inc. Contribution Margin by Product Conquistador Hurricane $fill in the blank 8276b5f91f87f86_2 $fill in the blank 8276b5f91f87f86_3 fill in the blank 8276b5f91f87f86_5 fill in the blank 8276b5f91f87f86_6 $fill in the blank 8276b5f91f87f86_8 $fill in the blank 8276b5f91f87f86_9 fill in the blank 8276b5f91f87f86_11 fill in the blank 8276b5f91f87f86_12 $fill in the blank 8276b5f91f87f86_14 $fill in the blank 8276b5f91f87f86_15 fill in the blank 8276b5f91f87f86_17% fill in the blank 8276b5f91f87f86_18% b. What advice would you give to the management of Galaxy Sports Inc. regarding the profitability of the two products? The line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more toward the line, the overall profitability of the company would increase.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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		$3,000
Variable cost of goods sold	(2,900)		(2,010)
Manufacturing margin	$1,700		$990
Variable selling expenses	(734)		(510)
Contribution margin	$966		$480
Fixed expenses	(450)		(190)
Operating income	$516		$290

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

	Conquistador	Hurricane
Sales unit volume	3,400		2,500

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

Galaxy Sports Inc.
Contribution Margin by Product

	Conquistador	Hurricane
	$fill in the blank 8276b5f91f87f86_2	$fill in the blank 8276b5f91f87f86_3
	fill in the blank 8276b5f91f87f86_5	fill in the blank 8276b5f91f87f86_6
	$fill in the blank 8276b5f91f87f86_8	$fill in the blank 8276b5f91f87f86_9
	fill in the blank 8276b5f91f87f86_11	fill in the blank 8276b5f91f87f86_12
	$fill in the blank 8276b5f91f87f86_14	$fill in the blank 8276b5f91f87f86_15
	fill in the blank 8276b5f91f87f86_17%	fill in the blank 8276b5f91f87f86_18%

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

The line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more toward the line, the overall profitability of the company would increase.

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