Question

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 Waves		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, if required.

Coast to Coast Surfboards Inc.
Contribution Margin by Territory
	East Coast	West Coast
Sales	$	$
Variable cost of goods sold
Manufacturing margin	$	$
Variable selling expenses
Contribution margin	$	$
Contribution margin ratio	%	%

Answer 1