Question: 2nd time. The answers were wrong the first time. ****Please pay attention to the numbers.*** PowerTrain Sports Inc. manufactures and sells two styles of All
2nd time. The answers were wrong the first time.
****Please pay attention to the numbers.***
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 | $5,000.00 | $5,275.00 |
| 3 | Variable cost of goods sold | 3,275.00 | 3,500.00 |
| 4 | Manufacturing margin | $1,725.00 | $1,775.00 |
| 5 | Variable selling expenses | 225.00 | 825.00 |
| 6 | Contribution margin | $1,500.00 | $950.00 |
| 7 | Fixed expenses | 485.00 | 310.00 |
| 8 | Income from operations | $1,015.00 | $640.00 |
In addition, the following sales unit volume information for the period is as follows:
| Mountain Monster | Desert Dragon | |
|---|---|---|
| Sales unit volume | 4,900 | 4,750 |
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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