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 $4,400 $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 Conquistador Hurricane $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select -% - Select -% 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 then_________ line, the overall profitability of the company would increase.
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 $4,400 $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 Conquistador Hurricane $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select -% - Select -% 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 then_________ line, the overall profitability of the company would increase.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
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 | $4,400 | $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.
| Conquistador | Hurricane | |
|
|
$- Select - | $- Select - |
|
|
- Select - | - Select - |
|
|
$- Select - | $- Select - |
|
|
- Select - | - Select - |
|
|
$- Select - | $- Select - |
|
|
- Select -% | - Select -% |
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 then_________ line, the overall profitability of the company would increase.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
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.Recommended textbooks for you
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,
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