Question

In: Accounting

Mountain Monster Desert Dragon 2 Sales price $5,500.00 $5,300.00 3 Variable cost of goods sold 3,290.00...

Mountain Monster

Desert Dragon

2

Sales price

$5,500.00

$5,300.00

3

Variable cost of goods sold

3,290.00

3,300.00

4

Manufacturing margin

$2,210.00

$2,000.00

5

Variable selling expenses

1,000.00

1,152.00

6

Contribution margin

$1,210.00

$848.00

7

Fixed expenses

475.00

320.00

8

Income from operations

$735.00

$528.00

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

Required:

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.
b.

What advice would you give to the management of PowerTrain Sports Inc. regarding the relative profitability of the two products?

Amount Descriptions

Contribution margin

Contribution margin ratio

Cost of goods sold

Fixed expenses

Gross profit

Manufacturing margin

Revenues

Variable cost of goods sold

Variable selling expenses

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.

PowerTrain Sports Inc.

Contribution Margin by Product

1

Mountain Monster

Desert Dragon

2

3

4

5

6

7
Amount Descriptions
Contribution margin
Contribution margin ratio
Cost of goods sold
Fixed expenses
Gross profit
Manufacturing margin
Revenues
Variable cost of goods sold
Variable selling expenses

X

Contribution Margin Report

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.

PowerTrain Sports Inc.

Contribution Margin by Product

1

Mountain Monster

Desert Dragon

2

3

4

5

6

7

X

Final Question

b. What advice would you give to the management of PowerTrain Sports Inc. regarding the relative profitability of the two products?

The Mountain Monster line provides the   total contribution margin and the     contribution margin ratio. If the sales mix were shifted more toward the     line, the overall profitability of the company would increase.

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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