v2 CengageNOWv21 Online teaching and learning resource from Cengage Learning Pri

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v2 CengageNOWv21 Online teaching and learning resource from Cengage Learning Print hem Product Profitability Analysis 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 facity operates at 100% of capacity. The following perunt informaton is available for the two products: Mountain Monster Desert Dragon Sales price Variable cost of goods sold Manufacturing margin Variable selling expenses Contribution margin Fixed expenses income from operations In addition, the following sales unit volume information for the period is as follows $6,400 ,030 $2,370 1,410 $960 450 $510 $4,000 2,680 $1,320 720 $600 240 $360 Mountain Monster Desert Dragon Sales unit volume 1,800 1,300 a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each product as a whole percent. PowerTrain Sports Inc Contribution Margin by Product Mountain Monster Desert Dragon Check My Work4 more Check My Work uses remaining Submit

Explanation / Answer

Powertrain Sports Inc Contribution margin by product Mountain monster Desert dragon Sales 1,800*$6,400 = 11,520,000 1,300*$4,000 = $5,200,000 Less: Variable costs 1,800*($4,030+$1,410) = $9,792,000 1,300*($2,680+$720) = $4,420,000 Contribution margin $                                                    1,728,000 $                                                    780,000 Fixed expense 1,800*$450 = $810,000 1,300*$240 = $312,000 Income from operations $                                                        918,000 $                                                    468,000 Contribution margin ratio $1,728,000/$11,520,000 = 15% $468,000/$780,000 = 60%

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