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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: Mountain Monster Desert Dragon Sales price $5,800 $3,800 Variable cost of goods sold 3,650 2,550 Manufacturing margin $2,150 $1,250 Variable selling expenses 1,164 718 Contribution margin $986 $532 Fixed expenses 460 210 Income from operations $526 $322 In addition, the following sales unit volume information for the period is as follows: Mountain Monster Desert Dragon Sales unit volume 1,900 1,400 a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each product as a whole percent. Powertrain Sports Inc. Contribution Margin by Product Mountain Monster Desert Dragon $ $ $ $ $ $ % % b. What advice would you give to the management of PowerTrain Sports Inc. regarding the relative profitability of the two products? The line provides the largest total contribution margin and the largest contribution margin ratio. If the sales mix were shifted more toward the line, the overall profitability of the company would increase.

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