Territory and product profitability analysis Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards. Atlantic Wave and Pacific Founder. These surfboards are sold in two regions. Hast Coast and West Coast. Information about the two surfboards is as follows: Atlantic Wave Pacific Pounder Sales price.................................... $200 $120 Variable cost of goods sold per unit........ 150 90 Manufacturing margin per unit............ $ 50 $ 30 Variable selling expense per unit........... 34 16 Contribution margin per unit............... $ 16 $ 14 The sales unit volume for the sales territories and products for the period is as follows: East Coast West Coast Atlantic Wave 40,000 25,000 Pacific Pounder 0 25,000 A. Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to two decimal places. B. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?

BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
BuyFind

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

Solutions

Chapter
Section
Chapter 20, Problem 20.13EX
Textbook Problem

Territory and product profitability analysis

Coast to Coast Surfboards Inc. manufactures and sells two styles of surfboards. Atlantic Wave and Pacific Founder. These surfboards are sold in two regions. Hast Coast and West Coast.

Information about the two surfboards is as follows:

  Atlantic Wave Pacific Pounder
Sales price.................................... $200 $120
Variable cost of goods sold per unit........ 150 90
Manufacturing margin per unit............ $ 50 $ 30
Variable selling expense per unit........... 34 16
Contribution margin per unit............... $ 16 $ 14

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

  East Coast West Coast
Atlantic Wave 40,000 25,000
Pacific Pounder 0 25,000
  1. A. Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent, rounded to two decimal places.
  2. B. What advice would you give to the management of Coast to Coast Surfboards regarding the relative profitability of the two territories?

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Chapter 20 Solutions

Financial & Managerial Accounting
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