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 $5,300.00 3 Variable cost of goods sold 3,255.00 3,400.00 4 Manufacturing margin $2,145.00 $1,900.00 5 Variable selling expenses 1,065.00 946.00 6 Contribution margin $1,080.00 $954.00 7 Fixed expenses 485.00 305.00 8 Income from operations $595.00 $649.00 In addition, the following sales unit volume information for the period is as follows: Mountain Monster Desert Dragon Sales unit volume 5,300 5,150 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? PowerTrain Sports Inc. Contribution Margin by Product 1 Mountain Monster Desert Dragon 2 3 4 5 6 7
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 $5,300.00 3 Variable cost of goods sold 3,255.00 3,400.00 4 Manufacturing margin $2,145.00 $1,900.00 5 Variable selling expenses 1,065.00 946.00 6 Contribution margin $1,080.00 $954.00 7 Fixed expenses 485.00 305.00 8 Income from operations $595.00 $649.00 In addition, the following sales unit volume information for the period is as follows: Mountain Monster Desert Dragon Sales unit volume 5,300 5,150 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? PowerTrain Sports Inc. Contribution Margin by Product 1 Mountain Monster Desert Dragon 2 3 4 5 6 7
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter21: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 12E: Galaxy Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVs), the...
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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 manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:
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1
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Mountain Monster
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Desert Dragon
|
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2
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Sales price
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$5,400.00
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$5,300.00
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3
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Variable cost of goods sold
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3,255.00
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3,400.00
|
|
4
|
Manufacturing margin
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$2,145.00
|
$1,900.00
|
|
5
|
Variable selling expenses
|
1,065.00
|
946.00
|
|
6
|
Contribution margin
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$1,080.00
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$954.00
|
|
7
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Fixed expenses
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485.00
|
305.00
|
|
8
|
Income from operations
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$595.00
|
$649.00
|
In addition, the following sales unit volume information for the period is as follows:
|
|
Mountain Monster
|
Desert Dragon
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| Sales unit volume | 5,300 | 5,150 |
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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PowerTrain Sports Inc.
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Contribution Margin by Product
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1
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Mountain Monster
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Desert Dragon
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2
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3
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4
|
|
|
|
|
5
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6
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7
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