Question

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. Required: Prepare a contribution margin by sales territory report. Calculate the contribution margin ratio for each territory as a whole percent.

Answer 1

Answer:

given

Coast to Coast Surfboards Inc.

                                          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

                      East Coast            West Coast

Atlantic Wave 40,000                  25,000

Pacific Pounder 0                        25,000

Calculations

Coast to Coast Surfboards Inc.

Contribution Margin by Territory.

                                   Atlantic Wave            Pacific Pounder

                              East Coast West Coast   East Coast  West Coast

Sales price                             $200                                $120

Units                            40,000  25,000                  0,        25000

Sales                        8000,000    5000,000          000,    3000,000

V. COGS                 (6000,000)   (3750000)                000,  (2250000)

MAnufg. Margin     2000,000    1250000                   000.   750,000

Var. & Selling Exp.  (1360000)    (850000)                   000.    (400,000)

Contribution margin 640,000       400,000                 000.     350,000

Contribution Margin Ratio = Contribution Margin/ Sales

CM ratio=               8%                 8%                             000 .       11.67%

Multiplying the number of units given against each territory with the respective costs gives this income statement.