Question
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 |
| Mountain Monster | Desert Dragon |
| 2 | Sales price | $5,000.00 | $5,275.00 |
| 3 | Variable cost of goods sold | 3,275.00 | 3,500.00 |
| 4 | Manufacturing margin | $1,725.00 | $1,775.00 |
| 5 | Variable selling expenses | 225.00 | 825.00 |
| 6 | Contribution margin | $1,500.00 | $950.00 |
| 7 | Fixed expenses | 485.00 | 310.00 |
| 8 | Income from operations | $1,015.00 | $640.00 |
In addition, the following sales unit volume information for the period is as follows:
| Mountain Monster | Desert Dragon | |
| Sales unit volume | 4,900 | 4,750 |
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 PowerTrain Sports Inc. regarding the relative profitability of the two products? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Application Of Quantitative Techniques For The Prediction Of Bank Acquisition Targets
Authors: Pasiouras Fotios
1st Edition
9812565183, 9789812565181
