a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. InstructionsPowerTrain Sports Inc. manufactures and sells two styles of All Terrain Vehicles (ATVS), the Mountain Monster and Desert Dragon, from a singlemanufacturing facility. The manufacturing facility operates at 100% of capacity. The following per-unit information is available for the two products:MountainDesert Dragon1Monster2 Sales price$5,300.00$5,300.003 Variable cost of goods sold3,210.003,350.004 Manufacturing margin$2,090.00$1,950.005 Variable selling expenses1,030.001,102.006 Contribution margin$1,060.00$848.007 Fixed expenses470.00305.008 Income from operations$590.00$543.00 Instructions4 Manufacturing margin$2,090.00$1,950.005 Variable selling expenses1,030.001,102.006 Contribution margin$1,060.00$848.007 Fixed expenses470.00305.008 Income from operations$590.00$543.00In addition, the following sales unit volume information for the period is as follows:Mountain Monster Desert DragonSales unit volume4,8004,650Required:a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list providedfor the exact wording of the answer choices for text entries.b. What advice would you give to the management of PowerTrain Sports Inc. regarding the relative profitability of the two products?

a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

a. Prepare a contribution margin by product report. Calculate the contribution margin ratio for each. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Describe the contribution margin ratio in layperson’s terms.
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