PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles
ID: 2471101 • Letter: P
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:
1
Mountain Monster
Desert Dragon
2
Sales price
$5,400.00
$5,325.00
3
Variable cost of goods sold
3,275.00
3,200.00
4
Manufacturing margin
$2,125.00
$2,125.00
5
Variable selling expenses
937.00
1,273.00
6
Contribution margin
$1,188.00
$852.00
7
Fixed expenses
475.00
310.00
8
Income from operations
$713.00
$542.00
In addition, the following sales unit volume information for the period is as follows:
Mountain Monster
Desert Dragon
Sales unit volume
5,400
5,250
Prepare a contribution margin by product report. Calculate the contribution margin ratio for each product as a percent, rounded to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
Mountain Monster
Desert Dragon
Sales
Variable Cost of Goods Sold
Manufacturing Margin
Variable Selling and Admin
Contribution Margin
Contribution Margin Ratio
1
Mountain Monster
Desert Dragon
2
Sales price
$5,400.00
$5,325.00
3
Variable cost of goods sold
3,275.00
3,200.00
4
Manufacturing margin
$2,125.00
$2,125.00
5
Variable selling expenses
937.00
1,273.00
6
Contribution margin
$1,188.00
$852.00
7
Fixed expenses
475.00
310.00
8
Income from operations
$713.00
$542.00
Explanation / Answer
Mountain monster Desert dragon sales 5400 5325 Less:variable cost of goods sold -3275 -3200 Manufacturing margin 2125 2125 Less:Variable selling and admin. -937 1273 contribution 1188 852 CM ratio =contribution /sales 1188/5400= .22 or 22% 852/5325= .16 or 16%
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