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Category > Accounting Posted 10 Sep 2017 My Price 7.00

Parker Pottery

Exercise 4-38 Multiple-Product Breakeven

 

Parker Pottery produces a line of vases and a line of ceramic figurines. Each line uses the same equipment and labor; hence, there are no traceable fixed costs. Common fixed cost equals

 

$30,000. Parker’s accountant has begun to assess the profitability of the two lines and has gath- ered the following data for last year:

 

 

 

 

 

 

 

 

 

 

 

 

Vases

Figurines

Price

$40

$70

Variable cost

30

42

Contribution margin

$10

$28

Number of units

1,000

500

 

Required:

 

1. Compute the number of vases and the number of figurines that must be sold for the com- pany to break even.

 

2. Parker Pottery is considering upgrading its factory to improve the quality of its products. The upgrade will add $5,260 per year to total fixed cost. If the upgrade is successful, the pro- jected sales of vases will be 1,500, and figurine sales will increase to 1,000 units. What is the new break-even point in units for each of the products?

 

Answers

Maurice Tutor
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Status NEW Posted 10 Sep 2017 03:09 PM My Price 7.00

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