Business, 28.06.2021 15:30 chrissycherry
PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the Mountain Monster and Desert Dragon, from a single manufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:
Mountain Monster Desert Dragon
Sales price $5,400.00 $5,250.00
Variable cost of goods sold 3,285.00 3,400.00
Manufacturing margin $2,115.00 $1,850.00
Variable selling expenses 1,035.00 905
Contribution margin $1,080.00 $945.00
Fixed expenses 485 310
Income from operations $595.00 $635.00
In addition, the following sales unit volume information for the period is as follows:
Mountain Monster Desert Dragon
Sales unit volume 5,000 4,850
Required:
a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each.
b. What advice would you give to the management of PowerTrain Sports Inc. regarding the relative profitability of the two products?
Answers: 3
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