Contribution Margin Report Final Question PowerTrain Sports Inc, manufactures an

Question

Contribution Margin Report Final 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 manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products MourtainDesert Dragon Monster $5,200.00 5,240.00 1.960.00 1200 31248.00 470.00 5.500.00 Variable cost of goods sold 5,450.00 : Manufacturing margin Variable seling expenses 6 i Contr 1108.00 $742.00 520.00 $42200 Fixed expenses income from pperations in addition, the following sales unit volume information for the peniod is as follows Mountain Monster Desert Dragon Check My Work PreviouS

Explanation / Answer

Contribution Margin Ratio = Contribution Margin/Revenues

The Company should focus on Mountain Monster styles of ATVs as the net profit margin on this product is approx. 15% as compared to Desert Dragon having net profit margin of 8%.

Mountain Monster Desert Dragon Revenues 4800 X 5200 4650 X 5300 Variable Cost of Goods Sold 4800 X 3240 4650 X 3450 Manufacturing Margin 4800 X 1960 4650 X 1850 Variable Selling Expense 4800 X 712 4650 X 1108 Contribution Margin 4800 X 1248 4650 X 742 Fixed Expenses 4800 X 470 4650 X 320 Income from Operations 4800 X 778 4650 X 422

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