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 | $5,400.00 | $5,225.00 |
| 3 | Variable cost of goods sold | 3,290.00 | 3,500.00 |
| 4 | Manufacturing margin | $2,110.00 | $1,725.00 |
| 5 | Variable selling expenses | 1,030.00 | 889.00 |
| 6 | Contribution margin | $1,080.00 | $836.00 |
| 7 | Fixed expenses | 475.00 | 315.00 |
| 8 | Income from operations | $605.00 | $521.00 |
In addition, the following sales unit volume information for the period is as follows:
| Mountain Monster | Desert Dragon | |
| Sales unit volume | 5,200 | 5,050 |
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?
|
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Todays Mood Is Sponsored By Auditing
Authors: Ruby Publishing
1st Edition
B08BG52SST, 979-8655512771
