Product Profitability Analysis

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 $3,600 Variable cost of goods sold 3,400 2,410 Manufacturing margin $2,000 $1,190 Variable selling expenses 1,082 650 Contribution margin $918 $540 Fixed expenses 430 220 Income from operations $488 $320

In addition, the following sales unit volume information for the period is as follows:

Mountain Monster Desert Dragon Sales unit volume 2,300 1,700

a. Prepare a The excess of sales over variable costs.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 Revenues

Contribution margin Cost of goods sold Direct labor Gross profit Revenues

$ $ Variable cost of goods sold

Fixed cost of goods sold Fixed selling expenses Manufacturing margin Sales Variable cost of goods sold

Manufacturing margin

Contribution margin Cost of Goods sold Fixed manufacturing costs Gross profit Manufacturing margin

$ $ Variable selling expenses

Fixed cost of goods sold Fixed selling expenses Manufacturing margin Sales Variable selling expenses

Contribution margin

Contribution margin Cost of goods manufactured Fixed manufacturing costs Fixed sales Manufacturing margin

$ $ Contribution margin ratio

Contribution margin ratio Fixed manufacturing costs Fixed sales Manufacturing margin Variable cost of goods sold

% %