Product Profitability Analysis PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS),...

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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 1,190 614 Contribution margin $810 $576 Fixed expenses 380 230 Income from operations $430 $346 In addition, the following sales unit volume information for the period is as follows: Sales unit volume Mountain Monster 3,500 Desert Dragon 2,600 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. 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 1,190 614 Contribution margin $810 $576 Fixed expenses 380 230 Income from operations $430 $346 In addition, the following sales unit volume information for the period is as follows: Sales unit volume Mountain Monster 3,500 Desert Dragon 2,600 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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Contribution Margin Sales Price Variable Cost of Goods Sold Variable Selling Expenses For the Mounta... View the full answer