PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles
ID: 2471096 • 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:
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.
PowerTrain Sports Inc.
Contribution Margin by Product
1
Mountain Monster
Desert Dragon
2
?
3
?
4
?
5
?
6
?
7
?
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
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 1,273.00 6 Contribution margin 1,188.00 852 7 Fixed expenses 475 310 8 Income from operations 713 542 Mountain Monster Desert Dragon 1 Sales price 5,400 5,325 2 Less:Variable cost of goods sold 3,275 3,200 3 Less:Variable selling expenses 937 1,273 4 Contribution margin 1,188 852 5 Sales price 5,400 5,325 6 Contribution margin Ratio 22.00% 16.00% 7 (Contribution Margin/Sales)*100
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