EX 20-12 Product profitability analysisObj. 4PowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), theMountain Monster and Desert Dragon, from a single manufacturing facility. The manufacturingfacility operates at 100% of capacity. The following per-unit information is available for thetwo products:Mountain MonsterDesert DragonSales price ..$5,400$5,250Variable cost of goods sold3,2853,400Manufacturing marginVariable selling expenses$2,115$1,8501,035905Contribution margin.$1,080$ 945Fixed expenses485310Income from operations$ 595$ 635In addition, the following sales unit volume information for the period is as follows:Mountain MonsterDesert DragonSales unit volume5,0004,850A. Prepare a contribution margin by product report. Calculate the contribution margin ratiofor each.В.What advice would you give to the management of PowerTrain Sports Inc. regard-ing the relative profitability of the two products?

Variable costing: Variable costing is the method that is used by the management (managers) for…

A. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. В. What advice would you give to the management of PowerTrain Sports Inc. regard- ing the relative profitability of the two products?

A. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. В. What advice would you give to the management of PowerTrain Sports Inc. regard- ing the relative profitability of the two products?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

EX 20-12 Product profitability analysis
Obj. 4
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:
Mountain Monster
Desert Dragon
Sales price ..
$5,400
$5,250
Variable cost of goods sold
3,285
3,400
Manufacturing margin
Variable selling expenses
$2,115
$1,850
1,035
905
Contribution margin.
$1,080
$ 945
Fixed expenses
485
310
Income from operations
$ 595
$ 635
In addition, the following sales unit volume information for the period is as follows:
Mountain Monster
Desert Dragon
Sales unit volume
5,000
4,850
A. Prepare a contribution margin by product report. Calculate the contribution margin ratio
for each.
В.
What advice would you give to the management of PowerTrain Sports Inc. regard-
ing the relative profitability of the two products?

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