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

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.