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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
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: 1 Desert Dragon Mountain Monster $5,400.00 $5,225.00 3,500.00 3,290.00 $2,110.00 $1,725.00 2 Sales price 3 Variable cost of goods sold 4 Manufacturing margin 5 Variable selling expenses 6 Contribution margin 7 Fixed expenses 8 Income from operations 1,030.00 889.00 $836.00 $1,080.00 475.00 315.00 $605.00 $521.00 In addition, the following sales unit volume information for the period is as follows: Mountain Monster Desert Dragon 5,200 5,050 Sales unit volume Required: a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. b. What advice would you give to the management of Power Train Sports Inc. regarding the relative profitability of the two products? Contribution Margin Report a. Prepare a contribution margin by product report Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. Power Train Sports Inc. Contribution Margin by Product 1 Mountain Monster Desert Dragon 2 3 4 5 6 7 Final Question Amount Descriptions Amount Descriptions Contribution margin Contribution margin ratio Cost of goods sold Fixed expenses Gross profit Manufacturing margin Revenues Variable cost of goods sold Variable selling expenses Final Question b. What advice would you give to the management of Power Train Sports Inc. regarding the relative profitability of the two products? contribution margin ratio. If the sales mix were shifted more The Mountain Monster line provides the toward the total contribution margin and the line, the overall profitability of the company would increase
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