help please. Thanks EX 20-12 Product profitability analysis A Desert Dragon Powe

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help please.
Thanks

EX 20-12 Product profitability analysis A Desert Dragon PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the utribution margin, Mountain Monster and Desert Dragon, from a single manufacturing facility. The man Obj. 4 4,583,250 facility operates at 100% of capacity. The following pe r-unit information is available for the two products Variable cost of goods sold Manufacturing margirn Variable selling expenses Contribution margin... Fixed expenses. Income from operations Mountain Monster $5,400 3,285 $2,115 1,035 1,080 Desert Dragon $5,250 3,400 $1,850 905 $945 310 635 485 595 volume information for the period is as follows: In addition, the following sales unit Desert Dragon 4,850 Mountain Monster 5,000 Sales unit volume A. Prepare a contribution margin by product report. Calculate the contribution margin ratio B. What advice would you give to the management of PowerTrain Sports Inc. regard- for each ing the relative profitability of the two products? Obj. 4 itu analysiS

Explanation / Answer

units 5,000 4,850 Contribution margin by product line Mountain Desert Monster Dragon Sales 27,000,000.00 25,462,500.00 Variable cost of goods sold 16,425,000.00 16,490,000.00 Manufacturing margin 10,575,000.00     8,972,500.00 Variable selling expense     5,175,000.00     4,389,250.00 Contribution margin     5,400,000.00     4,583,250.00 Contribution margin ratio(cont/sales) 20.00% 18.00% sales = units * selling price per unit cost = units * cost per unit b) The contribution margin of Mountain Monster is greater than that of Desert Dragon The management should reduce the cost of goods sold expense of Desert Dragon increase the price of Desert Dragon (note:since contribution by product line report was needed hence no net income is calculated)

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