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Category > Accounting Posted 29 Jul 2017 My Price 9.00

MULTIPLE-PRODUCT BREAK EVEN

Exercise 15-38  MULTIPLE-PRODUCT BREAK  EVEN

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 costs equal $30,000. Parker’s accountant has begun to assess the profitability of the two lines and has gathered 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

 

1.    Compute the number of vases and the number of figurines that must be sold for the company 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 costs. If the upgrade is successful, the projected 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?

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Maurice Tutor
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Status NEW Posted 29 Jul 2017 10:07 AM My Price 9.00

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