Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
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Chapter 6, Problem 13E

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 the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To calculate: The contribution margin ratio for each territory.

B.

To determine

To State: The advice regarding the relative profitability of two territories.

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Sales territory and salesperson profitability analysis Reyes Industries Inc. manufactures and sells a variety of commercial vehicles in the Northeast and South west regions. There are two salespersons assigned to each territory. Highercommission rates go to the most experienced salespersons. The following sales statisticsare available for each salesperson:                                                               Northeast                 Southwest                                                               Cassy G.  Todd           Tim        JeffAverage per unit:Sales price . . . . . . . . . . . . . . . . . . . . . . . . . $96,000  $84,000   $108,000 $78,000Variable cost of goods sold . . . . . . . . . . . 57,600   33,600       64,800    31,200Commission rate . . . . . . . . . . . . . . . . . . . . .12%       16%          16%        12%Units sold . . . . . . . . . . . . . . . . . . . . . . . . . . .28           24             24           38Manufacturing margin ratio . . . . . .…
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Territory and Product Profitability Analysis Coast to Coast 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:   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. Compute the contribution margin ratio for each territory as a whole percent, rounded to two decimal places, if required. Coast to Coast Surfboards Inc.Contribution Margin by Territory   East Coast West…

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Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only

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