Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 6, Problem 12E
(a)
To determine
Variable Costing
Managers frequently use variable costing for internal purposes for taking decision making. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead treated as period (fixed) expense.
Contribution Margin
Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.
To Prepare: The contribution margin and contribution margin ratio for each product.
(b)
To determine
To State: The advice regarding to the relative profitability of two products.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
$5,000
$3,200
Variable cost of goods sold
(3,150)
(2,140)
Manufacturing margin
$1,850
$1,060
Variable selling expenses
(800)
(484)
Contribution margin
$1,050
$576
Fixed expenses
(490)
(230)
Operating income
$560
$346
In addition, the following sales unit volume information for the period is as follows:
Conquistador
Hurricane
Sales unit volume
3,200
2,400
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…
Product profitability analysisPower Train Sports Inc. manufactures and sells two .styles of All Terrain Vehicles(ATVs), the Mountain Monster and Desert Dragon, from a single manufacturing facility.The manufacturing facility operates at 100% of capacity. The following per-unitinformation is available for the two products:
In addition, the following sales unit volume information for the period is as follows:
A. Prepare a contribution margin by product report. Calculate the contributionmargin ratio for each.B. What advice would you give to the management of Power Train Sports Inc.regarding the relative profitability of the two products?
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
$5,400
$3,200
Variable cost of goods sold
(3,400)
(2,140)
Manufacturing margin
$2,000
$1,060
Variable selling expenses
(758)
(388)
Contribution margin
$1,242
$672
Fixed expenses
(580)
(270)
Operating income
$662
$402
In addition, the following sales unit volume information for the period is as follows:
Conquistador
Hurricane
Sales unit volume
2,000
1,500
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
Sales v
1.380,000 X
Variable cost of goods sold v
৪78.600 X
MacBook Air
Chapter 6 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Ch. 6 - What types of costs are customarily included in...Ch. 6 - Which type of manufacturing cost (direct...Ch. 6 - Which of the following costs would be included in...Ch. 6 - In the variable costing income statement, how are...Ch. 6 - Prob. 5DQCh. 6 - Discuss how financial data prepared on the basis...Ch. 6 - Prob. 7DQCh. 6 - Explain why rewarding sales personnel on the basis...Ch. 6 - Prob. 9DQCh. 6 - Prob. 10DQ
Ch. 6 - Explain why service companies use different...Ch. 6 - Prob. 1BECh. 6 - Prob. 2BECh. 6 - Prob. 3BECh. 6 - Prob. 4BECh. 6 - Contribution margin by segment The following...Ch. 6 - Prob. 6BECh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Prob. 3ECh. 6 - Prob. 4ECh. 6 - Variable costing income statement On November 30,...Ch. 6 - Absorption costing income statement On March 31....Ch. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Prob. 15ECh. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Variable costing income statement for a service...Ch. 6 - Prob. 21ECh. 6 - Variable costing income statement for a service...Ch. 6 - Prob. 1PACh. 6 - Prob. 2PACh. 6 - Prob. 3PACh. 6 - Salespersons report and analysis Walthman...Ch. 6 - Prob. 5PACh. 6 - Prob. 6PACh. 6 - Absorption and variable costing income statements...Ch. 6 - Income statements under absorption costing and...Ch. 6 - Absorption and variable costing income statements...Ch. 6 - Prob. 4PBCh. 6 - Prob. 5PBCh. 6 - Prob. 6PBCh. 6 - Prob. 1ADMCh. 6 - Prob. 2ADMCh. 6 - Prob. 3ADMCh. 6 - Prob. 4ADMCh. 6 - Prob. 1TIFCh. 6 - Inventory effects under absorption costing BendOR,...Ch. 6 - Prob. 3TIF
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 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 $5,600 $3,400 Variable cost of goods sold (3,530) (2,280) Manufacturing margin $2,070 $1,120 Variable selling expenses (1,174) (610) Contribution margin $896 $510 Fixed expenses (420) (200) Operating income $476 $310 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,100 1,500 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 Productarrow_forwardProduct 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 $5,800 $3,800 Variable cost of goods sold (3,650) (2,550) Manufacturing margin $2,150 $1,250 Variable selling expenses (932) (604) Contribution margin $1,218 $646 Fixed expenses (570) (260) Operating income $648 $386 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 3,000 2,100 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…arrow_forwardProduct 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 $5,800 $3,800 Variable cost of goods sold (3,650) (2,550) Manufacturing margin $2,150 $1,250 Variable selling expenses (932) (604) Contribution margin $1,218 $646 Fixed expenses (570) (260) Operating income $648 $386 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 3,000 2,100 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…arrow_forward
- 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…arrow_forwardProduct 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 $4,400 $3,000 Variable cost of goods sold (2,770) (2,010) Manufacturing margin $1,630 $990 Variable selling expenses (750) (450) Contribution margin $880 $540 Fixed expenses (410) (220) Operating income $470 $320 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,100 1,500 Question Content Area 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 blank…arrow_forwardProduct 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 $4,400 $2,800 Variable cost of goods sold (2,770) (1,880) Manufacturing margin $1,630 $920 Variable selling expenses (706) (444) Contribution margin $924 $476 Fixed expenses (430) (190) Operating income $494 $286 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 3,600 2,700arrow_forward
- 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 $6,200 $4,000 Variable cost of goods sold (3,910) (2,680) Manufacturing margin $2,290 $1,320 Variable selling expenses (864) (520) Contribution margin $1,426 $800 Fixed expenses (670) (320) Operating income $756 $480 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 2,700 1,900 Question Content Area 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 Productblank…arrow_forwardProduct 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 $6,200 $4,000 Variable cost of goods sold (3,910) (2,680) Manufacturing margin $2,290 $1,320 Variable selling expenses (1,112) (680) Contribution margin $1,178 $640 Fixed expenses (550) (260) Operating income $628 $380 In addition, the following sales unit volume information for the period is as follows: Conquistador Hurricane Sales unit volume 3,500 2,600 Question Content Area 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 Productblank…arrow_forwarda. 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 % 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.arrow_forward
- 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 $2,600 $4,200 (2,650) (1,740) $1,550 Sales price Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Fixed expenses Operating income In addition, the following sales unit volume information for the period is as follows: Conquistador 2,000 Hurricane 1,500 Sales unit volume Conquistador (626) $924 (430) $494 % 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 Hurricane $860 (444) % $416 (170) $246arrow_forwardRoyal Lawncare Company produces and sells two packaged products—Weedban and Greengrow. Revenue and cost information relating to the products follow: Product Weedban GreengrowSelling price per unit . . . . . . . . . . . . . . . . . . . . . . . $6.00 $7.50Variable expenses per unit . . . . . . . . . . . . . . . . . . $2.40 $5.25Traceable fixed expenses per year . . . . . . . . . . . . $45,000 $21,000 Common fixed expenses in the company total $33,000 annually. Last year the company produced and sold 15,000 units of Weedban and 28,000 units of Greengrow.Required:Prepare a contribution format income statement segmented by product lines.arrow_forwardIsland Novelties, Inc., of Palau makes two products, Hawaiian Fantasy and Tahitian Joy. Present revenue,cost, and sales data for the two products follow:Hawaiian TahitianFantasy JoySelling price per unit .................................. $15 $100Variable expenses per unit ........................ $9 $20Number of units sold annually ................... 20,000 5,000Fixed expenses total $475,800 per year. The Republic of Palau uses the U.S. dollar as its currency.Required:1. Assuming the sales mix given above, do the following:a. Prepare a contribution format income statement showing both dollar and percent columns for eachproduct and for the company as a whole.b. Compute the break-even point in dollars for the company as a whole and the margin of safety inboth dollars and percent.2. The company has developed a new product to be called Samoan Delight. Assume that the companycould sell 10,000 units at $45 each. The variable expenses would be $36 each. The company’s fixedexpenses would not…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Cost-Volume-Profit (CVP) Analysis and Break-Even Analysis Step-by-Step, by Mike Werner; Author: Accounting Step by Step;https://www.youtube.com/watch?v=D0MOfse9OWk;License: Standard Youtube License